BitConnect victims will receive $17 million in restitution, according to an announcement from the US Department of Justice (DOJ) on January 12.
This statement indicates that a federal court in San Diego, Calif., ordered that these funds be given to 800 people in 40 countries.
BitConnect has been widely recognized as a Ponzi scheme, both publicly and in court proceedings. His associates have been indicted and convicted on various allegations: BitConnect founder Satish Kumbhani was indicted in February 2022, while top US promoter Glenn Arcaro pleaded guilty in September 2021. Additionally, the two were prosecuted by the United States Securities and Exchange Commission in September 2021.
BitConnect operated between 2016 and 2018. The value of the crypto token associated with the project crashed shortly after the project shut down.
Various jurisdictions, including the UK, Texas, and North Carolina, have taken action to restrict Bitconnect’s operations at an early date. However, the project’s distributed structure and lack of central leadership meant that some developments around the project continued even after it was officially closed or became the target of regulators.
The nature of the situation also meant that victims had to wait years for compensation. In November 2021, the DOJ seized $56 million worth of cryptocurrency with the intention of selling it and compensating the victims. Those $56 million in crypto funds would now be worth around $17 million due to market swings, although the DOJ did not say when it sold the seized crypto for cash.
In any case, the $17 million that must be returned to the victims is only part of BitConnect’s value, as it was seized personally from Arcaro. BitConnect itself has raised $2.4 billion from investors, according to a DOJ statement early 2022.
