Cryptocurrency

Feds Selling Crook's Huge Cryptocurrency Holding; US Attorneys Say Fraud Topped $2 Billion

Around $57 Million in Seized Cryptocurrency to be Sold to Repay Investors

Representations of the Bitcoin cryptocurrency are seen in this photo illustration.
Egdar Su | Reuters

Around $57 million in cryptocurrency seized through the prosecution of a man who participated in a large-scale investment scheme will be sold to repay investors victimized by the fraud, federal prosecutors in San Diego said Tuesday.

The liquidation, which the U.S. Attorney's Office called "the largest single recovery of cryptocurrency for victims to date," stems from the investment scheme BitConnect, which prosecutors say defrauded investors out of more than $2 billion.

The U.S. Attorney's Office said it is believed to be the largest cryptocurrency fraud ever criminally charged.

Glenn Arcaro of Los Angeles, 44, pleaded guilty to federal charges earlier this year for his role in misleading investors by claiming BitConnect used proprietary technology — known as the "BitConnect Trading Bot" and "Volatility Software" — to turn investors' money into huge returns.

Canadian cryptocurrency CEO Gerald Cotten was the only one holding the keys to millions of dollars of his customers' money - then he suddenly died while on his honeymoon in India, and thousands of customers' life savings and retirement investments were in jeopardy. A new podcast from CBC, "A Death in Cryptoland," looks into the case and hears from Cotten's friends and colleagues.

Prosecutors say BitConnect actually operated like a Ponzi scheme, which used investor funds to repay other BitConnect investors.

Arcaro, who officials say was BitConnect's top promoter in the United States, admitted to earning at least $24 million through the scheme, according to his plea agreement. His plea included an agreement to repay the defrauded investors, and a judge last week ordered the liquidation of Arcaro's fraud proceeds to begin the process. Prosecutors say the proceeds are largely in the form of cryptocurrencies, including "Bitcoin, Ethereum, Litecoin, Dash, and several others."

The U.S. Attorney's Office said victims of the scheme can learn about their rights and submit a victim impact statement for Arcaro's sentencing hearing by visiting.

Copyright CNS - City News Service
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