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$56 million in crypto to be liquidated by the U.S. Justice Department

The Justice Department said that the liquidation is the “largest single recovery of a cryptocurrency fraud by the United States to date.”

U.S. Department of Justice headquarters / Image by Wikimedia Commons

Wed, 17 Nov 2021, 13:06 pm UTC

The U.S. Department of Justice will be selling $56 million worth of crypto seized from Glenn Arcaro, who was the lead promoter of the BitConnect Ponzi scheme. Proceeds of the sale will be used as restitution to the victims of the scheme.

On November 12, 2021, U.S. District Judge Todd W. Robinson agreed to a request from the DOJ and the U.S. Attorney’s Office for the Southern District of California to liquidate the crypto assets worth around $56 million. The digital currencies were seized from Arcaro who consented to the seizure.

On September 1, Arcaro pleaded guilty to his participation in a massive conspiracy to defraud BitConnect investors in the U.S. and abroad. The scheme is the largest ever crypto fraud scheme that was criminally charged and was able to defraud over $2 billion from investors.

The Justice Department said that the liquidation is the “largest single recovery of a cryptocurrency fraud by the United States to date.” The government will maintain custody of the proceeds of the sale which will be held in U.S. dollars.

The proceeds of the crypto sale will be used to reimburse victims of the BitConnect scheme. The Justice Department advised victims of the fraud to visit the website https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twr for more information on how to submit claims for reimbursement.

The scam enticed victims by processing returns for their investments of as high as 40 percent per month supposedly generated with the use of BitConnect’s volatility software trading bot, CNBC reported. The scheme ran from January 2017 to January 2018 and was able to swindle thousands of people from the U.S. and abroad.

However, the Securities and Exchange Commission said that the company’s claims that BitConnect’s trading bot was used to invest funds from investors are not true. “These claims were a sham,” the SEC said in a lawsuit in September. “As Defendants knew or recklessly disregarded, BitConnect did not deploy investor funds for trading with its purported Trading Bot.”

“BitConnect and Kumbhani siphoned investors’ funds off for their own benefit, and their associates’ benefit, by transferring those funds to digital wallet addresses controlled by Kumbhani, Arcaro, other promoters, including the Arcaro Promoters, and other unknown individuals,” the SEC added.

Arcaro is scheduled for sentencing on January 7, 2022. If convicted he could face a maximum of 20 years in prison.

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