Bitconnect Promoter Plead Guilty to Fraud
Former director and promoter of the now defunct cryptocurrency exchange and lending Ponzi platform Bitconnect, Glenn Arcaro, has pleaded guilty of fraud. He is obliged to pay the investors $24 million.
In addition, the US Securities and Exchange Commission (SEC) accused Bitconnect and its founder, Satish Kumbhani, of a securities fraud that resulted in the receipt of $2 billion.
Arcaro pleaded guilty to charges of conspiracy to commit electronic fraud, according to a Sept.1 Department of Justice (DoJ) report.
The fraudulent scheme was that investors were offered to buy BitConnect coins and cryptocurrency platforms as high-yield investments.
The 44-year-old also admitted to misleading investors about the “BitConnect trading bot” and “volatility software” as capable of generating large and guaranteed profits.
Arcaro ran a large network of promoters in North America who formed a pyramid called the Bitconnect Referral Program. He earned about 15% of every investment in the BitConnect lending program, and also received a share of all investments through a hidden fund.
The SEC wants to bring to justice not only BitConnect, but also its founder, Satish Kumbhani.
According to the September 1 complaint, the SEC alleges that the defendants conducted a fraudulent and unregistered securities offering through the BitConnect lending platform between 2017 and 2018, resulting in approximately 325,000 BTC worth of $2 billion at the time.
The whereabouts of BitConnect founder Kumbhani are currently unknown.
The Securities and Exchange Commission is demanding full seizure of funds, barring defendants from violating securities laws in the future, and civil monetary penalties.