Lawsuits filed in the US last week against BitConnect promoters and executives were released to the public. The identities behind the alleged ponzi scheme including director Glenn Arcaro were unraveled, and several plaintiffs have claimed that the founders of OneCoin, another large-scale ponzi scheme, were involved in BitConnect.
Several lawsuits filed earlier this month suggested that Glen Arcaro practically ran the ponzi scheme as the director of US promotions, overseeing several promoters including Craig Grant and Travon James. The lawsuits accused BitConnect of running a ponzi scheme by using cryptocurrency as a cover. It promised investors a fixed income for their investment, which was never shared with the investors.
The entire organization was structured to benefit early investors by scamming users that joined the organization in the later stage. As the BitConnect ponzi scheme imploded, the value of the BitConnect coin (BCC) plunged to nearly zero, and people’s life savings and investments were lost overnight.
“BitConnect uses cryptocurrency as a cover for running its Ponzi scheme. For example: a. It provides daily interest on an investment that has no income other than new investor money; b. It artificially increases the value of its cryptocurrency by having new investors in the Ponzi scheme purchase BCC before investing; c. It hides the identity of the owners of this scam by using an offshore company created through a company called Companies Made Simple,” the lawsuit read.
David Mehmet, one of the plaintiffs against BitConnect, claimed that three executives and founders of Onecoin, a ponzi scheme that was cracked down by the Indian, Italian, German, and Bulgarian authorities earlier this year, have been associated with BitConnect. Mehmet claimed that Nigel Allen, the founder of OneCoin, XECoin, Crypto888, and Octacoin, along with two OneCoin founders Ruja Ignatova and Sebastian Greenwood have overseen the Bitconnect ponzi scheme, as top executives.
In January of this year, the Prosecutor’s Office of Bulgaria revealed that the government has raided the offices of OneCoin and seized its servers. Although OneCoin’s headquarters are based in Dubai, the Bulgarian government noted that the organization functions through “hundreds of affiliated companies on 4 continents […] [which] are being investigated in England, Ireland, Italy, the United States, Canada, Ukraine, Lithuania, Latvia, Estonia and many other countries.”
At the time, prior to her arrest, Ignatova claimed that OneCoin is not a ponzi scheme and that it is an education platform for cryptocurrency investors. Mehmet suggested that as Ignatova did with OneCoin, BitConnect has started to claim that it has operated as an educational platform for cryptocurrency investors, not a lending site.
OneCoin still remains functional in many countries apart from the selected few that have cracked down on the ponzi scheme. BitConnect could continue to operate if authorities fail to unravel all of the identities behind the ponzi scheme.
At one point, BitConnect was valued at over a billion dollars. As such, investors have lost over a billion dollars in this ponzi scheme, which was quite obvious from the beginning given its fixed return rate. The failure to punish its operators could lead to BitConnect-like ponzi schemes reappearing in the market once again.