More than 800 victims of the collapse of the BitConnect crypto Ponzi scheme will receive $17 million in settlements, according to the U.S. Department of Justice.
A federal district court in San Diego on Thursday ordered the restitution, which will be distributed to victims in more than 40 countries.
BitConnect has been marketed as an online crypto investment program that uses proprietary technology to generate high returns, but US securities regulators say the operation is a Ponzi scheme that has defrauded billions of dollars from investors. It closed in 2018.
Glenn Arcaro, the lead developer of US-based BitConnect, pleaded guilty to conspiracy to commit wire fraud in September 2021. A federal grand jury in San Diego indicted the founder of the investment program, Satish Kumbhani, last February .
According to the indictment, Kumbhani ordered the promoters of the loan program to manipulate the price of the BitConnect Coin (BCC) to create the impression that there was market demand for the BitConnect digital asset.
Kumbhani and his conspirators also allegedly hid and moved investor funds by moving assets across cryptocurrency exchanges on an international basis using a number of cryptocurrency wallets.
Furthermore, Kumbhani allegedly avoided BitConnect scrutiny and supervision by failing to comply with financial industry regulations, such as by failing to register with the Financial Crimes Enforcement Network (FinCEN) as required by the Bank Secrecy Act.
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