The US government claims it has seized $56 million worth of cryptocurrency belonging to a participant who took part in the BitConnect scam. The Department of Justice announces that this is the largest recovery of cryptocurrency to date and intends to sell the coins and use the proceeds to reimburse victims of the scam. The Department of Justice also says that the bitcoin was willingly given up by Los Angeles resident Glenn Arcaro, who claims he is BitConnect’s “number one promoter.”
According to the US Securities and Exchange Commission (SEC), the scam went in full swing after BitConnect was able to convince people to invest a total of $2 billion in return for an incredibly high rate after crypto trading. In other words, BitConnect branded itself as a get-rich-quick scheme for people to easily invest in cryptocurrency and cash out at a time when people were hearing a lot about crypto but didn’t know much about it. This was around the year 2016 through 2018.
From the on-set, the Department of Justice says it was all an organized scam. BitConnect practiced a Ponzi scheme where money was from new investors to pay old ones. Another practice BitConnect thrived on at the time being was advocating to build pyramid schemes where investors get a cut for convincing others to invest by promising them the same deal. Earlier in September, Glenn Arcaro pleaded guilty to playing a part in both practices of the scam while allegedly posting videos online to make fun of BitConnect doubters. He reveal that he had earned as much as $24 million by his participation.
According to The Verge, some may also remember BitConnect from a heavily memed presentation given by one of its investors, who repeatedly shouted “BitConneeeeeect” and said that his wife accused him of falling for a scam. While BitConnect largely traded in Bitcoin (victims would buy BitConnect’s own BCC tokens using Bitcoin and could ostensibly convert BCC back into Bitcoin through a convoluted process), the government plans to reimburse victims in USD. The Department of Justice’s press release says that the law enforcement arm of the US Postal Service will go ahead to assist with converting the crypto to fiat currency. The government has set up a website for victims who are looking for compensation after the court sentences Arcaro in January 2022.
A lot of these organized scams have surfaced in various parts of the world in recent times, TechBooky advises readers to ensure due diligence is carried out well before agreeing to commit to whatever scheme that was presented to you. It’s a good thing to invest to get an incredibly high ROI but understands so many have lost hard-earned money to a similar scheme. If you must invest, make sure it’s a decent fund that even when everything is lost, you wouldn’t feel it. When the ROI of investment is very high, chances are the risk is also high.