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15 May 2024

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A $2.4 Billion Crypto Scam

BitConnect was one of the largest cryptocurrency scams, duping investors of about US$2.4 billion globally. The scheme lured victims with absurdly high fixed interest rates.

The investment structure offered by BitConnect

As the Australian Securities and Investment Commission (ASIC) detailed, the fraudulent scheme even offered a lending platform which was promoted as an investment opportunity. Investors needed to acquire the platform’s native BitConnect coin to participate in the investment scheme. Investors could invest or loan these tokens for promised fixed returns.

However, the platform did not allow the investors to withdraw any of their loan amounts until the expiry of the lending period.

BitConnect promoted its scheme heavily in 2016 and 2017 globally. The scheme incentivised invites and referrals to grow its network of investors or, rather, victims. The crypto scheme suddenly evaporated in 2018, with the disappearance of its websites and social media handles, leading to investigations by agencies in several countries.

Promoting BitConnect in Australia

Bigatton, the Australian promoter of the scheme, promoted BitConnect locally in the country. According to ASIC, he promoted the scheme, its lending platform, and tokens. He conducted four seminars across the country and promoted the scheme with two social media posts.

Although it is unclear if Bigatton was aware of the scheme’s fraudulent nature, ASIC indicted him for offering financial services products without holding a licence. ASIC’s first action against the Aussie BitConnect promoter was to ban him from providing financial services for seven years. He was later arrested for his role in promoting the scheme.

“A related charge of operating an unregistered managed investment scheme was withdrawn following Mr Bigatton pleading guilty to the charge for which he is to be sentenced,” the regulator noted.

Meanwhile, the US securities market regulator indicted BitConnect’s founder, Satish Kumbhani, and its top US promoter, Glenn Arcaro, and subsequently obtained a judgment for recovery and civil penalties. The US agencies also settled with other BitConnect promoters.

Last year, a San Diego federal district court ordered the distribution of over $17 million in restitution among 800 victims of BitConnect across over 40 countries.

A $2.4 Billion Crypto Scam

BitConnect was one of the largest cryptocurrency scams, duping investors of about US$2.4 billion globally. The scheme lured victims with absurdly high fixed interest rates.

The investment structure offered by BitConnect

However, the platform did not allow the investors to withdraw any of their loan amounts until the expiry of the lending period.

Promoting BitConnect in Australia

“A related charge of operating an unregistered managed investment scheme was withdrawn following Mr Bigatton pleading guilty to the charge for which he is to be sentenced,” the regulator noted.

Last year, a San Diego federal district court ordered the distribution of over $17 million in restitution among 800 victims of BitConnect across over 40 countries.

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Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.

6292 Articles
79 Followers

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1 week to go until FMAS:24 kicks off and we couldn’t skip our interviews with some of this year’s sponsors 🤩 Starting off strong with Hannelé De Necker, CEO OF IFX Brokers.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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A $2.4 Billion Crypto Scam

Promoting BitConnect in Australia

A $2.4 Billion Crypto Scam

Promoting BitConnect in Australia

OEIS Financial Fraud Private Investigator: Finance Magnates Daily Update

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