The US government claims to have seized $56 million in bitcoin from a participant in the BitConnect Ponzi scheme. The Department of Justice claims that this is the greatest cryptocurrency recovery to date, and that it plans to sell the coins and use the money to compensate scam victims. The Department of Justice also claims that Los Angeles resident Glenn Arcaro, who claims to be BitConnect’s “number one promoter,” willingly gave up the bitcoin.
The hoax was fully operational, according to the US Securities and Exchange Commission (SEC), after BitConnect was able to persuade customers to spend a total of $2 billion in exchange for an astronomically high profit after crypto trading. In other words, BitConnect marketed itself as a get-rich-quick scheme that allowed consumers to invest in bitcoin and pay out quickly at a time when many people were hearing about cryptocurrencies but didn’t understand it. This occurred between the years of 2016 and 2018.
The Department of Justice claims it was all a set-up from the start. BitConnect ran a Ponzi scam, using funds from new investors to pay off existing investors. Another tactic BitConnect favoured at the time was lobbying for the creation of pyramid schemes, in which participants are paid a commission for persuading others to invest by promising them a similar bargain. Glenn Arcaro pleaded guilty to participating in both aspects of the scheme earlier this month, reportedly posting videos online mocking BitConnect sceptics. He revealed that his participation in the game netted him up to $24 million.