What it was
BitConnect took deposits, mostly in bitcoin, into what it called the Lending Program. The pitch was that a proprietary "BitConnect Trading Bot" and "Volatility Software" would trade the volatility of crypto markets and return substantial and guaranteed profits. Deposits were converted into BitConnect Coin, and a multi-level marketing network of promoters earned commissions on recruitment. The Department of Justice puts BitConnect's peak market capitalisation at $3.4 billion and the total taken from investors at approximately $2.4 billion.
The Bitcoin connection is the reason it belongs here rather than nowhere: the money that went in was real bitcoin, sent by people who had heard that bitcoin plus a trading bot was better than bitcoin.
On the record
Glenn Arcaro, BitConnect's lead promoter in the United States, pleaded guilty in September 2021 and was sentenced on 16 September 2022 in the United States District Court for the Southern District of California to 38 months in prison. The Department of Justice states that BitConnect "operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors", and that up to 15 per cent of money invested went to a slush fund for the benefit of the owner and promoters. The Ponzi scheme is recorded as having taken in 4,154 victims from 95 countries. Arcaro admitted earning no less than $24 million from it.
On 12 January 2023 a federal district court in San Diego ordered more than $17 million in restitution distributed to approximately 800 victims in over 40 countries.
Satish Kumbhani, BitConnect's founder, was charged by a federal grand jury in San Diego on 25 February 2022 with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operating an unlicensed money transmitting business, and conspiracy to commit international money laundering. Those charges are allegations, the case has not been tried, and the Department of Justice's announcement records that Kumbhani is at large.
The Securities and Exchange Commission sued BitConnect, Kumbhani, Arcaro and Future Money Ltd. in the Southern District of New York; judgments were entered against Arcaro and Future Money on 3 December 2021. Listing here is not endorsement.