<p>The wait for some of the victims of the crypto <a href="https://www.financemagnates.com/terms/p/ponzi-scheme/" target="_blank" id="43e13ed7-9295-4761-824f-9d9c98eb15a5_1" class="terms__main-term">Ponzi scheme</a> BitConnect looks to be over, as a San Diego federal district court on Thursday ordered the distribution of over $17 million in restitution. The proceeds will be distributed among 800 Bitconnect victims across over 40 countries.</p><p>Some BItConnect Investors to Receive Restitution</p><p>However, the restitution will cover only a fraction of the Bitcoinnect victims, as the scheme defrauded around 4,000 investors from 95 countries. It was one of the <a href="https://www.financemagnates.com/cryptocurrency/news/sec-settles-charges-against-three-bitconnect-promoters/" target="_blank" rel="follow">largest cryptocurrency Ponzi schemes</a> that swindled about $2.4 billion from investors riding the craze of the crypto market in 2017. The scheme was launched in 2016 and collapsed in 2018.</p><p>A viral video from a promotional event of BitConnect.</p><p>BitConnect Was a Classic Ponzi Scheme</p><p>The Department of Justice elaborated that the promoters of BitConnect fraudulently marketed its <a href="https://www.financemagnates.com/terms/i/initial-coin-offering-ico/" target="_blank" id="86e11299-89d2-4c19-86f6-8bafb301e8c6_1" class="terms__secondary-term">initial coin offering (ICO</a>) and digital currency exchange as a lucrative investment. They even <a href="https://www.financemagnates.com/cryptocurrency/news/something-not-right-bitconnect/" target="_blank" rel="follow">mislead investors</a> with BitConnect’s lending program, claiming to use proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” to generate “substantial profits and guaranteed returns.”</p><p>The scheme promised investors to return 1 percent daily compounded interest in investments that make an annual return of 3,700 percent.</p><p>However, BitConnect operated a classic Ponzi scheme: the promoters paid earlier investors with proceeds brought in from newer investors. Additionally, the operators of the fraudulent scheme endured keeping 15 percent of the incoming customers’ investments into a slush fund for its owners and promoters.</p><p>The court order for restitution came with the guilty plea of BitConnect’s US-based promoter, <a href="https://www.financemagnates.com/cryptocurrency/news/sec-obtains-judgment-against-lead-us-bitconnect-promoter/" target="_blank" rel="follow">Glenn Arcaro</a>, for conspiracy to commit wire fraud. Last October, he was sentenced to 38 months in prison and was ordered to pay $24 million to BitConnect victims. Furthermore, the US prosecutors <a href="https://www.financemagnates.com/cryptocurrency/news/federal-grand-jury-in-san-diego-indicts-bitconnects-founder/" target="_blank" rel="follow">indicted Satish Kumbhani</a>, the Founder of BitConnect, last year for his role in the massive fraud. However, his whereabouts are unknown. On top of that, he is facing a police investigation in India.</p>
This article was written by Arnab Shome at www.financemagnates.com.
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