The United States Department of Justice plans to sell $ 56 million in seized cryptocurrency in connection with its case against the BitConnect Ponzi scheme.
In a Nov. 16 announcement, the Justice Department said He would sell the seized crypto and retain the US dollar proceeds until he could use the funds to provide restitution to BitConnect victims. The US government currently has the $ 56 million in cryptocurrencies in wallets, and said the amount of compensation to those affected by the BitConnect fraud would depend on a "future restitution order by the court at the time of the judgment".
"This liquidation is the largest single recovery of cryptocurrency fraud by the United States to date," the Justice Department said, also calling those involved with BitConnect the largest cryptocurrency fraud scheme ever. faced criminal charges.
It is unclear through what means the US government would handle the sale of millions of dollars in cryptocurrencies, or what effect it may have on the price of major assets like Bitcoin (BTC) and ether (ETH). According to data from Cointelegraph Markets Pro, the price of BTC is hovering around $ 60,000 after dropping about 7% today, while the price of ETH is $ 4,254 at press time, following a similar drop.
The actors behind BitConnect were responsible for executing a fraudulent offering of unregistered securities that earned them $ 2 billion. Former director and promoter of the project Glenn Arcaro pleaded guilty to fraud charges in September and ordered to pay $ 24 million to BitConnect victims.
The Securities and Exchange Commission, or SEC, also brought charges against Arcaro and BitConnect founder Satish Kumbhani, whose whereabouts are unknown at press time. Settlements with the SEC for other people involved in the Ponzi scheme are pending, but many people are pending. facing jail time or severe financial penalties for his role in allegedly defrauding investors.
Related: SEC Charges 5 for Illegally Promoting Bitconnect's $ 2 Billion Ponzi Scheme
Created in 2017, BitConnect had promoters lure investors with promises of big returns, prompting them to use BTC as collateral against which they could borrow and trade the platform's native token. The loan platform closed in 2018 after cease and desist orders from state regulators, leaving many investors unable to redeem their cryptocurrency holdings.
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