An Australian man has pleaded guilty to promoting cryptocurrency lending services for the now-defunct crypto exchange BitConnect.
This infamous entity allegedly operated as a Ponzi scheme and shut down in 2018 amid accusations of defrauding victims of over $2.4 billion. In a May 17 statement, the Australian Securities and Exchange Commission (ASIC) declared that John Bigatton offered financial product advice without holding an Australian Financial Services license. He was not authorized to provide financial services related to the lending platform.
Promoting BitConnect in Australia
ASIC alleged that Bigatton, as BitConnect’s national promoter, offered financial product advice on six occasions at different locations across Australia. This included advice given at four seminars and through two social media posts. BitConnect promoted its lending platform as an investment opportunity, encouraging investors to buy BitConnect coins (BCC) through its website.
Investors could loan BCC for a fixed period in exchange for high interest rates. Once invested, they couldn’t control or withdraw their money until the lending period ended. Though it’s unclear if Bigatton knew about the scheme’s fraudulent nature, ASIC charged him for providing financial services products without a license.
According to the United States Internal Revenue Service, the platform was allegedly set up to operate as a Ponzi scheme. It paid early BitConnect investors with money from later investors. The court has scheduled a sentencing hearing for July 5.
A $2.4 Billion Crypto Scam
BitConnect launched in February 2016 and operated a platform and digital currency until January 2018. The founders eventually disappeared with investors’ money. BitConnect heavily promoted its scheme globally in 2016 and 2017. The crypto scheme abruptly vanished in 2018, with its websites and social media accounts disappearing. This led to investigations by agencies in multiple countries. BitConnect duped investors of about $2.4 billion globally, making it one of the largest cryptocurrency scams.
In January 2023, the U.S. District Court for the Southern District of California ordered restitution totaling $17 million for the fraudulent scheme. Victims of the BitConnect investment scheme found some relief from the multibillion-dollar fraud scheme. A court ordered that they receive a share in a $17 million restitution.
Meanwhile, the US securities market regulator charged BitConnect’s founder, Satish Kumbhani, and its top US promoter, Glenn Arcaro. They later secured a judgment for recovery and civil penalties. US agencies also reached settlements with other BitConnect promoters.
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