BitConnect victims will receive approximately R$90 million in compensation
CryptoFácil – The BitConnect scam has become one of the biggest scams in cryptocurrency history. However, the US Department of Justice announced, on Wednesday (12), the payment of compensation to some of those affected by the coup.
According to an official release from the Ministry of Justice, part of the victims will receive compensation in the amount of 17 million US dollars. In current values, the amount corresponds to approximately R$90 million.
The decision came from the Federal District Court in San Diego, which ordered compensation. About 800 victims from more than 40 countries will share the sum, the first compensation paid in this case.
As reported by CriptoFácil, the principal manager of BitConnect pleaded guilty to wire fraud charges in 2021. In November of that year, the Department of Justice sold the equivalent of R$308 million in cryptocurrency to compensate the scheme’s victims.
Cheating and false promises
The US Securities and Exchange Commission (SEC) alleged that BitConnect committed fraud and made false promises to investors. The company’s scheme worked through the “Volatility Software Trading Robot”.
With this program, BitConnect claimed to generate income above the market and provided a portion of that value to those who entered the scheme. Investors received a token, the “BitConnect Token,” which they could sell and profit from the process as well.
But it was all a farce. What its founders did was use investors’ money for personal benefit. They then send the money to digital wallets under their control, effectively ripping off investors.
Federal prosecutors indicted BitConnect, its founder Satish Company, and lead plaintiff Glenn Arcaw in September 2021. At the time, the Department of Justice claimed the scam amounted to $2 billion.
In the end, the total amount came to $2.4 billion. Company and Arcao were also charged with offering securities without SEC authorization.
feathers
However, the sentence the Department of Justice handed down to Arcao was low: just three years in prison for marketing the BitConnect lending software as an investment.
Prosecutors further said that Arcaro ran a “Ponzi scheme” using money from new investors to pay off old investors. He allegedly created a website called Future Money to attract investors to the exchange’s lending program.
In total, BitConnect has had a presence in almost the entire planet. In all, the scheme claimed the lives of 4,000 victims from 95 countries. That is, the decision of the Ministry of Justice on compensation covers about 20% of the victims.
The Department of Justice did not say when it sold the money it seized in 2021. But it should be noted that in 2021 it declared a value of $56 million. But the compensation announced on Wednesday is about 66% less than that amount.
In short, it is likely that the Department of Justice sold cryptocurrency after the 2022 crash, which contributed to the decrease in the amount of compensation. Based on the current value, each victim will receive an average of $42,500, or about 2.25 bitcoins ().
However, it should be noted that the $17 million amount represents only 0.7% of the total $2.4 billion in fraud generated by BitConnect.
by CryptoFacil