According to a press release from the Department of Justice, the director and promoter of online crypto lending platform BitConnect has pleaded guilty for his role in allegedly scamming retail investors of more than $2 billion (DOJ).
According to the announcement, Glenn Arcaro is guilty of conspiring to “exploit investor interest in cryptocurrency by fraudulently presenting BitConnect’s proprietary coin offering and digital currency exchange as a lucrative investment.”
According to a separate news release with the Securities and Exchange Commission, Arcaro, the company’s main promoter in the United States, was reportedly participating in the scam alongside BitConnect and its creator, Satish Kumbhani (SEC).
According to the SEC announcement, from early 2017 to January 2018, the defendants were conducting a bogus offering and securities sale through a “lending programme” established by BitConnect. To entice investors, the organisation reportedly fraudulently said that it would provide a “volatility software trading bot” that would produce better payouts by utilising investors’ cash.
According to the SEC announcement, BitConnect and the other defendants used the monies for their own purposes rather than assisting customers as promised.
Furthermore, the defendants established a network in which promoters from all over the world benefited from BitConnect commissions that were hidden from investors, according to the SEC announcement. Arcaro enticed investors into the lending programme by using a website he built called Future Money.
“We claim that these defendants stole billions of dollars from retail investors all over the world by exploiting their interest in digital assets,” said Lara Shalov Mehraban, associate regional director of the SEC’s New York Regional Office, in a statement released by the SEC. “Those who participate in misbehaviour in the digital asset arena will be forcefully pursued and held accountable.”
According to the DOJ statement, “Arcaro admitted that he made no less than $24 million through the BitConnect fraud scheme, all of which he must repay to investors, according to court documents.”
Fraud has been on the rise amid the pandemic as everyone migrated much of their activities online. That has come with an increase in scams involving cryptocurrency, according to Peter Diskin, assistant regional director at the SEC’s Atlanta office.