The US Justice Department wants to sell $56 million worth of cryptocurrencies to compensate victims of the BitConnect scam

The US Justice Department wants to sell $56 million worth of cryptocurrencies to compensate victims of the BitConnect scam
In a November 16 announcement, the Justice Department said it would sell seized crypto and keep the proceeds in US dollars until it can use the funds to provide compensation to BitConnect victims. 

The US government currently holds $56 million in cryptocurrencies and said the amount of compensation for those affected by the BitConnect scam would depend on “a future restitution order issued by the court in a judgment”.

“This is the largest single cryptocurrency fraud recovery by the United States to date,”the Justice Department said, also calling out those involved in BitConnect, the largest cryptocurrency fraud scheme ever prosecuted.

It is unclear how the US government would handle the sale of millions of dollars’ worth of cryptocurrencies, or what impact this may have on the price of major assets such as Bitcoin (BTC) and Ether (ETH). 

The people behind BitConnect were responsible for running a fraudulent offering of unregistered securities that netted them $2 billion in profits. The former director and promoter of the project, Glenn Arcaro, pleaded guilty to fraud in September and was forced to pay $24 million to BitConnect victims.

The Securities and Exchange Commission (SEC) has also filed charges against Satish Kumbhani, the founder of Arcaro and BitConnect, whose whereabouts are unknown at the time of publication. Settlements with the SEC for others involved in the Ponzi scheme are pending, but many face jail time or severe financial penalties for their role in allegedly defrauding investors.

Created in 2017 BitConnect had promoters tempting investors with promises of large returns, encouraging them to use BTC as collateral against which they could borrow and trade the platform’s native token. 

The lending platform was shut down in 2018 after cease and desist orders from state regulators, leaving many investors unable to redeem their cryptocurrency holdings.

22-11-2021, Mr Advice TEAM


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