Lawsuits filed in the US last week against BitConnect’s promoters and executives have been released to the public. The identities of the individuals behind the alleged Ponzi scheme including director Glenn Arcaro were revealed, and several plaintiffs have claimed that the founders of OneCoin, another large-scale Ponzi scheme, were involved with BitConnect.
Several lawsuits filed earlier this month suggested that Glen Arcaro practically ran the Ponzi scheme as its director of US promotions, overseeing several promoters including Craig Grant and Travon James. The lawsuits accused BitConnect of running a Ponzi scheme using cryptocurrency as a cover. It promised investors a fixed income from their investment, which was never shared with the investors.
The entire organization was structured to benefit early investors by scamming users who joined the organization at a 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 reads.
David Mehmet, a plaintiff in one of the cases against BitConnect, claimed that three executives and founders of Onecoin, a Ponzi scheme that was investigated by the Indian, Italian, German, and Bulgarian authorities earlier this year, are 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, oversaw the BitConnect Ponzi scheme as top executives.
In January of this year, the Prosecutor’s Office of Bulgaria revealed that the government raided the offices of OneCoin and seized its servers. Although OneCoin is 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.”
Prior to her arrest, Ignatova claimed that OneCoin was not a Ponzi scheme and that it was an educational platform for cryptocurrency investors. Mehmet suggested that BitConnect has similarly started to claim to have operated as an educational platform for cryptocurrency investors, not a lending site.
OneCoin still remains functional in many countries apart from the select few that have cracked down on the Ponzi scheme. BitConnect could continue to operate if authorities fail to identify all of the identities behind the Ponzi.
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 obviously a scam from the beginning given its fixed return rate. The failure to punish its operators could lead to more BitConnect-like Ponzis in the future.