Justice Department says seizure is largest single recovery from cryptocurrency fraud in US
US District Judge Todd W Robinson last week agreed to a request by the US Department of Justice and the US Attorney’s Office for the Southern District of California to forfeit proceeds from Glen Arcaro, the US promoter of Bitconnect’s cryptocurrency scheme. Mr. Arkaro agreed to the confiscation.
A lawyer for Mr. Arkaro declined to comment.
The Securities and Exchange Commission sued Bitconnect in September, accusing its founder Satish Kumbhani of a $2 billion fraud that misappropriated bitcoin from investors around the world. That same month, Mr. Arcaro pleaded guilty in federal criminal court to his role in robbing American investors.
Bitconnect sold its digital assets in 2016 in exchange for bitcoin. The company told investors that it had an automated program that would make money by trading the contributed bitcoins. The profit will be shared with the investors by way of interest payment.
But according to the SEC, Bitconnect did not use a program to trade bitcoin. Instead, the regulator said, Mr. Kumbhani embezzled some amount for himself and shared other amounts with promoters who helped him raise funds.
The government said it would begin the process of restitution for those who fell victim to the Bitconnect scheme, by selling the cryptocurrency and withholding income in US dollars.
According to the Justice Department, Mr. Arkaro, who is to be sentenced on January 7, 2022, could face up to 20 years in prison.
—Dave Michaels contributed to this article.
David Smagalla [email protected] . Feather