DOJ to Sell $56M in Crypto Proceeds From BitConnect Fraud Scam

A U.S. federal judge is allowing the U.S. Department of Justice (DOJ) to liquidate approximately $56 million in proceeds seized from Glenn Arcaro, the lead promoter of BitConnect, a crypto lending program that defrauded thousands of investors out of an estimated $2 billion.

• The DOJ said in an announcement Tuesday that the liquidation was the most sizable recovery of assets tied to a crypto fraud by the U.S. to date.
• The agency said it would “begin the process” of selling the seized cryptocurrency and would hold the proceeds in U.S. dollars with the intent of providing restitution to the victims of the scheme.
• In September, Arcaro pleaded guilty to conspiracy to commit wire fraud in what the DOJ called “the largest cryptocurrency fraud scheme ever charged criminally.”
• The 44-year-old Arcaro “sat atop a large network of promoters in North America, forming a pyramid scheme known as the BitConnect Referral Program,” the DOJ said at the time of his guilty plea. He is scheduled for sentencing on Jan. 7, 2022, and faces a maximum 20-year prison sentence.
• BitConnect, which operated from 2016 to 2018, shut down after the company received cease-and-desist letters from Texas state regulators alleging securities law violations.
• The U.S. Securities and Exchange Commission (SEC) also filed charges earlier this year against BitConnect and its founder, Satish Kumbhani, as well as Arcaro.