The US Department of Justice has received permission to sell $56 million in cryptocurrency seized by BitConnect.

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US Department of Justice gets approval to liquidate $56 million in cryptocurrency from BitConnect seizure

The funds will be used by the government to repay investors.

A district judge has given the US Department of Justice permission to start liquidating $56 million in cryptocurrencies from the “number one promoter” of BitConnect, a failing cryptocurrency that was related to a Ponzi scam a few years ago.

 

Back in September, 44-year-old Glenn Arcaro of Los Angeles pleaded guilty to participating in a conspiracy to defraud BitConnect investors. Arcaro said he and others knowingly mislead investors about BitConnect’s supposedly proprietary technology, which they claimed could generate substantial profits and guaranteed returns.

“In truth, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors,” the Justice Department said.

Investors collectively dumped over $2 billion into the scheme, making it the largest cryptocurrency fraud scheme ever charged criminally.

The government’s goal with the liquidation is to make whole victims of the scheme through restitution. Those who lost money are invited to fill out a victim impact statement to identify themselves as potential victims. The government will sell off the crypto and hold the proceeds in US dollars before distributing it to victims.

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It’s unknown which cryptocurrency or cryptocurrencies the assets were seized in, but Bitcoin is a plausible assumption. After reaching an all-time high of nearly $69,000 earlier this month, the largest cryptocurrency by market cap is currently trading slightly south of $58,000.

Arcaro, meanwhile, is scheduled to be sentenced early next year and is facing a maximum of 20 years in prison for his role as the top promoter of BitConnect in the US. Arcaro said he earned no less than $24 million from BitConnect, all of which must be paid back to investors.

Image credit Pixabay, Worldspectrum

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