U.S. Department of Justice sells $56 million in cryptocurrency to compensate victims of BitConnect fraud

The U.S. Department of Justice plans to sell $56 million worth of cryptocurrency, which was seized in connection with the BitConnect Ponzi scheme.

In the announcement on November 16, the Ministry of Justice Said It will sell the seized cryptocurrency and hold the proceeds in U.S. dollars until it can use the funds to provide compensation to BitConnect victims. The U.S. government currently holds $56 million in cryptocurrency in its wallet and stated that the amount of compensation to those affected by BitConnect fraud will depend on “a future compensation order issued by the court at the time of its judgment.”

“This liquidation is the largest single recovery of cryptocurrency fraud in the United States to date,” the Justice Department said, adding that the people involved in BitConnect are the largest cryptocurrency fraud program ever faced with criminal charges.

It is not clear how the U.S. government will handle the sale of millions of dollars worth of cryptocurrency, or what impact it might have on the price of major assets such as Bitcoin (Bitcoin) And ether (Ethereum).According to the data from Cointelegraph Markets Pro, The price of BTC hovered around $60,000 after a drop of about 7% today, while the price of ETH was at $4,254 at the time of release. It has also experienced a similar decline before.

Participants behind BitConnect are responsible for fraudulent unregistered securities issuance, netting them $2 billion.The former director and promoter of the project Glenn Arcaro pleads guilty to fraud charges In September, he was ordered to pay $24 million to victims of BitConnect.

The US Securities and Exchange Commission (SEC) also filed charges against Arcaro and BitConnect founder Satish Kumbhani, whose whereabouts were unknown at the time of the release.The settlement of other individuals involved in the Ponzi scheme with the US Securities and Exchange Commission is pending, but many Face jail or severe financial penalties Because they are suspected of defrauding investors.

related: The SEC accused 5 people of illegally promoting the $2 billion Bitconnect Ponzi scheme

BitConnect was founded in 2017. Its promoters attracted investors with promises of high returns, enticing them to use BTC as collateral, and they could borrow and trade the platform’s native tokens.Lending platform Closed in 2018 after stop and stop order From national regulators, many investors cannot redeem their encrypted assets.