Assistant US Attorneys Daniel C. Silva, Mark W. Pletcher, Lisa Sanniti and Carl Brooker
SUMMARY OF THE PRESS RELEASE—September 1, 2021
SAN DIEGO — Glenn Arcaro of Los Angeles pleaded guilty today in federal court to his participation in a massive conspiracy involving BitConnect, a cryptocurrency investment program, which defrauded more than 2 US and foreign investors. billions of dollars. The BitConnect scheme is considered the biggest cryptocurrency fraud ever to be criminally charged.
As admitted in documents filed today before U.S. Magistrate Judge Mitchell D. Dembin, Arcaro conspired with others to exploit investor interest in cryptocurrency by fraudulently marketing the exclusive coin offering of BitConnect and the exchange of digital currencies as a lucrative investment.
Arcaro further admitted that he and others conspired to deceive investors about BitConnect’s alleged proprietary technology, known as “BitConnect Trading Bot” and “Volatility Software”, as being capable of generating substantial profits and guaranteed returns by using investor money to trade on the volatility of the cryptocurrency exchange markets. In truth, BitConnect exploited a manual Ponzi scheme by paying the early investors of BitConnect with money from subsequent investors.
“Arcaro and his confidants have taken advantage of investors’ interest in cryptocurrency. As a result, a staggering number of people have lost a huge amount of money,” Acting US District Attorney Randy S. Grossman said. Southern California. “The Department of Justice will continue to protect the investing public and monitor the burgeoning cryptocurrency industry. For those next to defraud the investing public, may this action by the Department of Justice be a stark warning To the investing public, let that also serve as a warning to protect your money and invest it wisely.
It was through the use of social media, Arcaro acknowledged in his plea agreement, that he and others made materially false and misleading statements, while concealing important facts, all to persuade investors that BitConnect was a lucrative investment. During the scheme, Arcaro posted videos that made fun of those who questioned whether BitConnect had a trading bot and volatility software, doubted the true identity of the owner of BitConnect, and complained about losing their money in BitConnect.
According to documents filed today, Arcaro was at the top of a large network of promoters in North America, forming a pyramid scheme known as the BitConnect Referral Program. Arcaro earned up to 15% of each investment in another part of the program – the BitConnect “loan program” – either from investors it recruited directly or from those recruited by others under Arcaro in the pyramid. Arcaro also received a portion of all investments from a hidden “slush” fund.
“Arcaro has accepted responsibility for its actions of defrauding thousands of people around the world to invest in BitConnect,” said Special Agent in Charge Eric Smith of the FBI Field Office in Cleveland. “It filled the pockets of millions of dollars, money from victims who thought their funds were invested in a new cryptocurrency with a high rate of return. Those who choose to engage in criminal financial deception should know that the FBI will not stop until all scammers are identified and held accountable. “
“Arcaro has capitalized on the emergence of cryptocurrency markets, prompting innocent investors around the world to step in early by promising guaranteed returns and harnessing the internet and social media to reach more victims with more. ease and speed, “said the special agent in charge. Ryan L. Korner of the IRS Criminal Investigation (IRS-CI) Field Office in Los Angeles. “To cover up and promote their scheme, Arcaro and his accomplices circumvented the reporting regulations of the SEC and FinCEN, US agencies created to protect investors and our financial systems. The IRS-CI will prosecute and eliminate these scams to protect investors and bring these financial fraudsters to justice. “
Arcaro admitted he made as much as $ 24 million from the BitConnect fraud conspiracy, which, according to court documents, he has to pay back to investors.
Acting U.S. Attorney Randy S. Grossman thanked the FBI Field Office in Cleveland, the IRS Criminal Investigation, and law enforcement partners in India, Slovenia and around the world for their current and future efforts. , who helped and continue to help in this investigation. Grossman also thanked Assistant US Prosecutors Daniel C. Silva, Mark W. Pletcher, Lisa Sanniti and Carl Brooker and Prosecutor Kevin Lowell of the Criminal Division’s Fraud Section who are handling this investigation. The Office of International Affairs of the Criminal Division provided considerable assistance in this case.
In a parallel action, the United States Securities and Exchange Commission today announced civil lawsuits against Arcaro and 3 others in connection with the same behavior.
Sentencing is scheduled to take place on November 15, 2021 at 9:30 a.m. before U.S. District Judge Todd W. Robinson.
If you believe you are a victim of this fraud, please contact the FBI at [email protected]
RESPONDENT File number 21CR2542-TWR
Glenn Arcaro Los Angeles, California Age: 44
SUMMARY OF EXPENSES
Conspiracy to Commit Electronic Fraud — Title 18, USC, Section 1349
Criminal Forfeiture – Title 18, USC, Section 982
Maximum penalty: twenty years in prison, a fine of $ 250,000 or double the gross gain or loss resulting from the offense, whichever is greater; confiscation and restitution
IRS Criminal Investigation
* Charges and allegations contained in an indictment or information are only charges, and the accused are considered innocent unless and until their guilt is proven.