North American BitConnect Head Pleads Guilty to Fraud

Glenn Arcaro, head of the North American division of BitConnect, pled guilty in US District Court to conspiracy to commit wire fraud.

Within BitConnect, Arcaro participated in what prosecutors called a “textbook Ponzi scheme,” which defrauded their investors of over $2 billion. In his plea agreement, Arcaro admitted to earning “no less than $24 million from the BitConnect fraud conspiracy.”. As part of that plea agreement, he must return that money to investors. Arcaro could be sentenced to up to 20 years in prison on November 15.

BitConnect claimed to use proprietary technology that could generate massive gains trading on the volatility of cryptocurrency exchange markets. However, according to prosecutors, “BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors.”. The US Attorney’s Office remarked that the BitConnect scheme is one, if not the largest cryptocurrency fraud ever charged. 

SEC sues BitConnect

Arcaro’s plea occurred the same day the US Securities and Exchange Commission (SEC) filed a civil lawsuit against BitConnect. The regulatory authority called BitConnect “a global fraudulent and unregistered offering of investments into a program involving digital assets.” 

The SEC alleges that BitConnect founder Satish Kumbhani and others embezzled investors’ funds for their own benefit. The regulator also believes BitConnect established a large network of promoters around the world, suggesting this was a coordinated effort. 

Recently, the SEC also concluded its judgement on three key individuals tied to BitConnect. The SEC has judged that Bitconnect promote Joshua Jeppesen will need to pay back $3 million in disgorgement and prejudgement interest. In addition, Jeppesen received a $150,000 while having to hand in 190 Bitcoin, totaling roughly $9.2 million. 

Fellow former-promoter Michael Noble must pay disgorgement, prejudgment interest and a civil penalty in a court-ordered amount. Lastly, the court order relief defendant Laura Mascola to pay $576,358 in disgorgement and prejudgement interest.