The U.S. Justice Department has announced that it will compensate victims of the cryptocurrency scam, BitConnect, who lost money when its pyramid scheme collapsed earlier this year. The decision to sell the $56 million in crypto tokens was made by new Deputy Attorney General Rod Rosenstein on Friday after months of consideration and research into how best to serve victims while complying with federal disclosure laws.,
The “US Justice Dept is selling $56M in crypto to compensate victims of BitConnect’s fraud” is a story that has been circulating for a while now. The US Justice Department has announced that they will be selling off the funds from the BitConnect scam, which was worth over $4 billion.
The US Department of Justice intends to sell $56 million in bitcoin confiscated as part of its investigation into the Ponzi scam BitConnect.
The Justice Department said on Nov. 16 that it would sell the confiscated cryptocurrency and keep the revenues in US dollars until it could utilize the money to compensate BitConnect victims. The $56 million in cryptocurrency is now held by the US government in wallets, and the amount of compensation paid to anyone harmed by BitConnect’s scam will be determined by a “future restitution order by the court during sentencing,” according to the US government.
The Justice Department said, “This liquidation represents the greatest single recovery of a cryptocurrency scam by the United States to date,” referring to people associated with BitConnect as the largest cryptocurrency fraud scheme to ever face criminal charges.
It’s unknown how the US authorities would handle the sale of millions of dollars’ worth of cryptocurrencies, or what impact it will have on significant assets like Bitcoin (BTC) and Ether (ETH) (ETH). The price of BTC is hanging at $60,000, according to Cointelegraph Markets Pro data, after decreasing about 7% today, while the price of ETH is $4,254 at the time of publishing, after a similar decline.
BitConnect’s perpetrators were responsible for a $2 billion unregistered securities sale that made them rich. Glenn Arcaro, the project’s former director and marketer, pleaded guilty to fraud charges and was sentenced to pay $24 million to BitConnect’s victims in September.
The Securities and Exchange Commission (SEC) has also filed charges against Arcaro and BitConnect founder Satish Kumbhani, whose whereabouts are unknown as of this writing. Other individuals implicated in the Ponzi scheme have reached settlements with the SEC, but many are facing jail time or substantial financial fines for their part in fraudulently defrauding investors.
The SEC has charged five people with unlawfully advertising the $2 billion Bitconnect Ponzi scam.
BitConnect was founded in 2017, and its proponents enticed investors with promises of high profits by allowing them to borrow and trade the platform’s native token using BTC as collateral. Following stop and desist orders from state authorities, the lending site shut down in 2018, leaving many investors unable to redeem their crypto holdings.
The “bitconnect founder” is a cryptocurrency that was created by BitConnect. The currency has been linked to fraud, and the US Justice Department has decided to sell $56M in crypto in order to compensate victims of the scam.
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