The US Internal Revenue Service claims that this setup enabled the site to operate as a Ponzi scheme, with recent investors paying out profits to previous ones.
One Australian guy has come clean about his involvement with the now-defunct cryptocurrency exchange BitConnect, which was suspected of running a Ponzi scheme and scamming more than $2.4 billion from its victims before going dark in 2018.
“The Australian Securities and Investments Commission (ASIC) said on May 17 that Mr. Bigatton gave advice on financial products without having an Australian Financial Services license or permission to do so.” He also gave advice on the loan platform.
The Australian Securities and Investments Commission (ASIC) said that BitConnect national promoter John Louis Anthony Bigatton provided financial product advice at six separate events throughout Australia, including four seminars and two social media postings.
“Mr. Bigatton promoted BitConnect and the Lending Platform using social media, seminars he held at several places around Australia, and in-person meetings with investors,” ASIC said further.
Promoted as a promising investment option, BitConnect’s lending platform enticed users to buy BitConnect currency (BCC) electronically.
Investors could lend BCC money at excessive interest rates for a certain duration. They couldn’t manage their loans or get their money out until the lending term ended, even after investing.
The US Internal Revenue Service claims that this setup enabled the site to operate as a Ponzi scheme, with recent investors paying out profits to previous ones.
On July 5, a sentencing hearing will take place. The website and digital currency BitConnect went live in February 2016, but unexpectedly went down in January 2018 when its creators vanished with investor funds.
A comfort for victims of the BitConnect investment scam was the January 2023 restitution award of $17 million from the U.S. District Court for the Southern District of California, which addressed the fraudulent operation.
A court ordered that certain victims of the BitConnect scam scheme get a share of the $17 million reparations, which brought some relief to their situation. Nobody knows what became to founder Satish Kumbhani.
Also Read: RBI and India’s Securities Commissioner Engage in Crypto Regulations Battle
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