Victims of BitConnect Scheme to Receive More than $17 Million to Compensate for Losses

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Assistant U. S. Attorneys Carl Brooker, Lisa Sanniti, and Mark W. Pletcher

SAN DIEGO — A federal judge has ordered Glenn Arcaro - one of the leaders of a massive cryptocurrency investment scheme that defrauded investors worldwide - to pay $17,646,801 dollars in restitution to approximately 800 victims from over 40 countries.

Arcaro, 45, the top U.S.-based promoter for BitConnect, pleaded guilty in September of 2021, admitting that he conspired with others to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s proprietary coin offering and digital currency exchange as a lucrative investment.

Arcaro and others misled investors about BitConnect’s “Lending Program.” Under this program, Arcaro touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.

In truth, however, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors. Arcaro and others ensured up to 15 percent of the money invested into BitConnect went directly into a slush fund to be used for the benefit of its owner and promoters. Arcaro was sentenced in September of 2022 to 38 months in prison.

On February 25, 2022, the founder of BitConnect, Satish Kumbhani, was indicted for his central role in the multibillion-dollar fraud. He remains a fugitive from justice and anyone with information on his whereabouts should contact the FBI at 216-522-1400.

"Hundreds suffered devastating financial losses as a result of this terrible deception, and we hope today’s ruling will provide some relief to the victims," said U.S. Attorney Randy Grossman.

Grossman thanked the prosecution team as well as the FBI’s Cleveland Cyber Crime and White Collar Crime teams, IRS-Criminal Investigation, and the Financial Investigations and Border Crimes Task Force - a multiagency task force based in San Diego and Imperial counties that is funded by the Treasury Executive Office of Asset Forfeiture, for their excellent work on this case.

“To perpetrate a massive fraud scheme that intentionally deceived hundreds of people around the globe is horrendous,” said Cleveland FBI Special Agent in Charge Gregory Nelsen. “Today’s hearing serves as a blunt warning to others who plot to trick investors that we will uncover the truth and seek restitution. The FBI is committed to protecting investors from sophisticated cryptocurrency scammers that seek to capitalize on the novelty of digital currency. We applaud the collaborative work with our federal, state, and local partners to bring justice to the victims.”

“Glenn Arcaro and his co-conspirators took advantage of innocent investors worldwide utilizing cyberspace to reach victims from over 40 countries.  Investors believed they were investing in cryptocurrency, but BitConnect’s proprietary coin and digital coin exchange were indeed fraudulent,” said Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation’s Los Angeles Field Office. “Today’s order of restitution will return over $17 million to those that were misled and invested in BitConnect. IRS Criminal Investigation, our law enforcement partners and the USAO in the Southern District of California worked hard to assist both foreign and domestic victims of this Ponzi scheme.” 

Assistant U.S. Attorneys Carl Brooker, Lisa Sanniti, and Mark W. Pletcher of the Southern District of California and Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section prosecuted the case. The Department of Justice Office of International Affairs and United States Postal Inspection Service provided indispensable assistance to the investigation.

DEFENDANT                                               Case Number 21CR2542-TWR                              

Glenn Arcaro                                                  Los Angeles, CA                    Age: 45

SUMMARY OF CHARGES

Conspiracy to Commit Wire Fraud—Title 18, U.S.C., Section 1349

Criminal Forfeiture—Title 18, U.S.C., Section 982

Maximum penalty: Twenty years in prison, $250,000 fine or twice the gross gain or loss from the offense, whichever is greater; forfeiture and restitution

AGENCIES

FBI

IRS Criminal Investigation—Financial Investigations and Border Crimes Task Force

United States Postal Inspection Service