Victims of the BitConnect crypto pyramid will receive a refund of more than $17 million. This follows from press release US Department of Justice. The federal district court in San Diego ruled that the amount of compensation will be distributed among approximately 800 victims of BitConnect actions from more than 40 countries. RBC Crypto.
The BitConnect case is one of the most famous examples of fraud in the cryptocurrency market. An anonymous development team (the main one of whom called himself Satao Nakamoto) offered to invest in the BCC token created by BitConnect and receive a stable income from this. For example, users who invested $10,000 were promised an annual return of 90% by scammers.
The project also touted BitConnect’s allegedly patented technology, known as “BitConnect Trading Bot” and “Volatility Software”, as being able to generate significant and guaranteed profits by exploiting the volatility of the crypto market, the agency said in a statement.
The company used the classic Ponzi scheme for financial pyramids, and did not disclose where the money comes from to pay bonuses. In fact, BitConnect paid out earlier investors with the money of those who came later.
Vitalik Buterin was the first to call the project a financial pyramid. At the end of January 2018, financial regulators of securities from the states of Texas and North Carolina also recognized the BitConnect business model as a classic pyramid scheme, and the project was stopped. After the closure of the company, the value of the BCC token instantly collapsed by 92%, and by September 2018 it was removed from all exchanges.
In September 2021, Glenn Arcaro, a leading promoter of BitConnect in the US, pleaded guilty to conspiracy to commit wire fraud. Separately, on February 25, 2022, BitConnect founder Satish Kumbhani was indicted for playing a central role in orchestrating at least $2 billion of crypto scams.
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