A federal judge in San Diego on Thursday ordered one of the leaders of an alleged investment fraud scheme involving cryptocurrency to pay more than $17 million in restitution to some 800 victims around the world.
The restitution order stems from a grand jury indictment against the owners and operators of cryptocurrency BitConnect company. Federal prosecutors say the company operated like a Ponzi scheme, with investors receiving money from other investors.
Glenn Arcaro, 45, the company's main US promoter, pleaded guilty to federal charges and was sentenced to just over three years in prison. Arcaro was ordered on Thursday to pay $17,646,801 in restitution to victims of cryptocurrency fraud in more than 40 countries.
BitConnect founder Satish Kumbhani was also charged and remains at large.
According to the US Attorney's Office, BitConnect investors were misled by the company's claims that it used proprietary technology, known as the "BitConnect Trading Bot" and "Volatility Software," to convert investor money into large profits.
But while investor funds were used to pay other BitConnect investors, prosecutors say Arcaro and others put up to 15% of investor money into a slush fund "to be used for the benefit of the owner and promoters ( of BitConnect)".
โHundreds suffered devastating financial losses as a result of this terrible hoax, and we hope that today's ruling provides some relief to the victims,โ said US Attorney Randy Grossman. said in a statement.
Kumbhani was indicted last February. Authorities have asked anyone with information on his whereabouts to contact the FBI at 216-522-1400.
