A group of crypto fraud victims of the BitConnect investment scheme will see a respite from the multi-billion dollar fraud scheme after a court ordered them to receive a share of $17 million restitution.
The United States District Court for the Southern District of California ordered restitution of the “massive” scheme on January 12 according to a launching the same day by the Department of Justice (DOJ).
800 victims of the scheme, hailing from 40 countries, will be able to take a small portion of the $17 million restitution, a term that refers to returning property or the monetary value of losses to the rightful owner.
The DOJ statement noted that Bitconnect was an alleged crypto-lending platform promoting proprietary technology, including the “Bitconnect Trading Bot” and “Volatility Software” that claimed returns would be guaranteed by net investors.
He promised a return of an average daily compound interest of 1% or 3,700% per year.
Investors would exchange Bitcoin (BTC) and receive Bitconnect Coin (BCC) in return, which could be lent at different interest rates.
However, the entire platform turned out to be a “textbook Ponzi scheme” as early investors were paid with funds provided by new investors, he wrote.
The crypto platform launched in 2016 but collapsed in 2018 after stealing $2.4 billion from more than 4,000 people in 95 countries.
Related: How to tell if a cryptocurrency project is a Ponzi scheme
The alleged founder of Bitconnect, Satish Kumbhani, was indicted by the Department of Justice in February 2022. He is also the subject of a police investigation in India and his whereabouts are currently unknown.
US-based lead Bitconnect promoter Glenn Arcaro pleaded guilty to wire fraud conspiracy charges in September 2021 and was ordered to return $24 million to investors.
According to the Department of Justice, Arcaro and others used 15% of the money from Bitconnect investors for a slush fund to be used for the benefit of its owner and other promoters.
On Sep. 16, 2022, Arcaro was sentenced to 38 months in prison for his involvement in Bitconnect.
