A group of BitConnect investment scheme crypto scam victims are set to get some respite from the multi-billion dollar scam scheme after a court ordered they receive a share of a $17 million refund.
The U.S. District Court for the Southern District of California on Jan. 12 ordered restitution for the “massive” program, according to a Department of Justice (DOJ) release released the same day.
800 victims of the program from 40 countries will be able to receive a small portion of the $17 million in restitution, a term that refers to the return of property or monetary values of losses to the original owner.
The DOJ statement noted that Bitconnect was an alleged crypto lending platform that touted proprietary technologies like the “Bitconnect Trading Bot” and “Volatility Software” that claimed to bring investors guaranteed returns.
It promised a return with an average daily compound interest of 1%, or 3,700% annually.
Investors would trade Bitcoin (BTC) and receive Bitconnect Coin (BCC) in return, which could be lent at different interest rates.
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However, the entire platform turned out to be a “textbook Ponzi scheme” as early investors were paid with funds from new investors, she wrote.
The crypto platform launched in 2016 but collapsed in 2018 after stealing $2.4 billion from over 4,000 people from 95 countries.
Related: How to Tell if a Cryptocurrency Project is a Ponzi Scheme?
The alleged founder of Bitconnect, Satish Kumbhani, was indicted by the DOJ in February 2022. He is also the subject of a police investigation in India and his whereabouts are currently unknown.
Kumbhani (right) in an interview from 2017. Image: Youtube
Leading US-based Bitconnect promoter Glenn Arcaro pleaded guilty to serving fraud conspiracy charges in September 2021 and was ordered to return $24 million to investors.
According to the DOJ, Arcaro and others have used 15% of Bitconnect investor funds for a slush fund to be used to benefit the owner and other promoters.
On September 16, 2022, Arcaro was sentenced to 38 months in prison for his involvement in Bitconnect.
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