$56 million in crypto from BitConnect’s Glenn Arcaro sold off
The DOJ has announced “approximately $56 million” in cryptocurrency obtained from Glenn Arcaro will be liquidated.
Proceeds are to be distributed to BitConnect victims.
The DOJ’s announcement follows a joint motion filed on November 12th.
The motion sought permission to sell Arcaro’s surrendered cryptocurrency assets.
The cryptocurrency was recovered from “20 separate cold storage devices or cryptocurrency online platforms” under Arcaro’s control.
Arcaro turned the cryptocurrency over to the DOJ as part of his plea agreement.
On October 26, 2021, Defendant surrendered all of his cryptocurrency assets to Special Agents from the United States Postal Inspection Service (“USPIS”) in the form of the Subject Asset
cryptocurrencies held by Defendant.
Thus began the process of victim restitution and forfeiture of any funds in excess of those paid to victims of the fraud.
The Subject Assets are currently held in cryptocurrency wallets under the control of the USPIS.
Later the same day the joint motion was filed, the court authorized the sale of Arcaro’s crypto assets.
Upon entry of the Court’s interlocutory sale order, the USPIS will sell the
cryptocurrency and hold the proceeds as fiat currency—U.S. dollars.
The USPIS will then utilize these Substitute Assets to provide restitution to victims of the BitConnect fraud pursuant to a future restitution order by this Court at sentencing.
Efforts by the DOJ to piece together the flow of crypto within BitConnect have proven difficult. In part due to other countries’ unwillingness to regulate cryptocurrency related MLM fraud.
Tracing the fraud proceeds back to each victim has proven nearly
Once BitConnect received investors’ funds, it laundered the investors’
funds internationally through a collection of its cryptocurrency wallets, known as the “BitConnect Cluster,” in order to promote and conceal the underlying fraud.
Therefore, by its very design, the scheme has made identifying individual victims with precision nearly impossible.
Investigators have attempted to search known cryptocurrency wallets tied to known co-conspirators, but it has proven challenging to identify all of the wallets.
Many of the servers with the data for these wallets are located outside of the United States.
Investigators have reached out to the foreign countries, but those
jurisdictions vary in their ability and willingness to seize that data.
Even if investigators are able to seize this data, it will take a great deal of time and resources to review the data and identify additional victims.
To that end the DOJ requested permission to effectuate alternative BitConnect victim notification.
That request was granted on October 12th. Consequently the DOJ has set up a specific case page on their website for BitConnect victims.
Victims who lost money are encouraged to fill out a “brief questionaire” and file a victim impact statement.
With respect to restitution;
The Government will contact known potential victims through the
Victim Notification System (VNS) and invite them to fill out a victim impact statement on the Federal Bureau of Investigation’s (FBI) site.
(The) FBI will then vet the responses to determine the victims.
Glenn Arcaro is scheduled to be sentenced on January 7th, 2022.