Over $17M in restitution ordered for victims of cryptocurrency fraud

SAN DIEGO (CNS) – A San Diego federal judge Thursday ordered one of the leaders of an alleged investment fraud scheme involving cryptocurrency to pay more than $17 million in restitution to around 800 victims worldwide.

The restitution order stems from a grand jury indictment returned against the owners and operators of cryptocurrency company BitConnect. Federal prosecutors say the company was run like a Ponzi scheme, in which investors were repaid using money from other investors.

Glenn Arcaro, 45, the company’s top U.S.-based promoter, pleaded guilty to federal charges and was sentenced to just over three years in prison. Arcaro was ordered Thursday to pay $17,646,801 in victim restitution to investors from over 40 countries.

BitConnect’s founder, Satish Kumbhani, has also been indicted and remains a fugitive.

According to the U.S. 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 turn investors’ money into huge returns.

But while investor funds were being used to repay other BitConnect investors, prosecutors say Arcaro and others put up to 15% of investors’ money into a slush fund “to be used for the benefit of (BitConnect’s) owner and promoters.”

“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.

Kumbhani was indicted last February. Authorities asked anyone with information regarding his whereabouts to contact the FBI at 216-522-1400.