BitConnect Exec Admits to Role in Alleged $2B Crypto Fraud

The director and promoter of online crypto lending platform BitConnect has pleaded guilty for his part in allegedly defrauding retail investors of more than $2 billion, according to a press release from the Department of Justice (DOJ).

Glenn Arcaro admitted that he conspired “to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s proprietary coin offering and digital currency exchange as a lucrative investment,” the release stated.

Arcaro, the company’s top promoter in the U.S., was allegedly involved in the scheme with BitConnect and its founder, Satish Kumbhani, according to a separate press release from the Securities and Exchange Commission (SEC).

From early 2017 through January 2018, the defendants were undertaking a fake offering and securities sale through a “lending program” BitConnect offered, the SEC release stated. To get investors onboard, the company allegedly falsely said that it would be offering a “volatility software trading bot” that could yield higher rewards through using investors’ deposits.

However, BitConnect and the other defendants used those funds for their own benefits rather than helping customers as promised, according to the SEC release.

And in addition, the defendants set up a network in which there were promoters around the world benefiting from commissions from BitConnect, which were concealed from investors, the SEC release stated. Arcaro used a website he created called Future Money to rope investors into the lending program.

“We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets,” said Lara Shalov Mehraban, associate regional director of SEC’s New York Regional Office, in the SEC release. “We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space.”

According to the DOJ release: “Arcaro admitted that he earned no less than $24 million from the BitConnect fraud conspiracy, all of which, according to court documents, he must repay to investors.”

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.

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