John Bigatton, BitConnect’s former promoter, pleaded guilty to one criminal charge related to providing unlicensed financial services.
Bigatton appeared in the Sydney Local Court on May 16 and admitted providing unlicensed financial services on behalf of another person. This is a breach of section 911B(1) of the Australian Corporations Act.
BitConnect was a financial services business and online cryptocurrency platform that offered investment opportunities through its website, including a product known as a lending platform. Investors must acquire BitConnect Coin (BCC), a cryptocurrency token, to participate in this platform.
The lending platform allowed lenders to invest in, or “lend,” BCC for a fixed period of time in return for promised high interest rates. However, investors could not control the loan or withdraw capital until the loan term ended.
In connection with his public relations activities, Bigatton advertised the now-defunct BitConnect Ponzi scheme on social media, at seminars across Australia and in-person meetings with investors. He provided financial product advice without an Australian financial services license or authorization to provide financial services.
It is known that these activities were carried out over a total of six times, including four seminars and two social media posts.
The sentencing hearing is reportedly scheduled for July 5.
Charges related to operating an unregistered managed investment scheme were withdrawn after Bigatton pleaded guilty to the first charge.
This case is being prosecuted by the Director of Public Prosecutions following an investigation and referral by ASIC.
BitConnect’s dark past
BitConnect was shut down in 2018 after being accused of running a Ponzi scheme that defrauded investors of millions of dollars. The platform promised an unusually high return on investment.
On 1 September 2020, the Australian Securities and Investments Commission (ASIC) banned Bigatton from providing financial services for seven years.
The ban follows ASIC’s investigation into Bigatton’s involvement as an Australian state promoter of the BitConnect scheme. The scheme collapsed in early 2018, defrauding investors of significant sums of money.
The ban is part of ASIC’s ongoing efforts to crack down on fraudulent activity in the cryptocurrency industry and protect investors from potential fraud.
In January 2023, the U.S. District Court in San Diego ordered 800 victims of the Bitconnect Ponzi scheme to receive a portion of the $17 million in compensation recovered from the $2.4 billion fraud.
This comes after a California judge ordered the funds to be distributed, marking a significant milestone in ongoing efforts to compensate those affected by fraudulent cryptocurrency platforms.
The $17 million in damages was paid out of $56 million forfeited by Glenn Arcaro, one of BitConnect’s top promoters. Arcaro pleaded guilty to one count of conspiracy to commit wire fraud in September 2021 and was later sentenced to 38 months in prison for his role in the scheme.
In related news, the FBI has uncovered a major financial fraud case involving Manhattan resident Idin Dalpour, who allegedly orchestrated a multi-million dollar Ponzi scheme linked to cryptocurrency, defrauding investors of $43 million.
According to media reports on May 1, the Justice Department said Dalpour lured investors with promises of high returns through investments in his Las Vegas hotel services business and cryptocurrency trading operations, which ultimately turned out to be false.
Dalpour allegedly ran a classic Ponzi scheme, using funds from new investors to pay out early investors and diverting the remaining funds for personal expenses, including gambling losses and private school tuition. The indictment alleges that Dalpour manipulated contracts and bank records to defraud investors by offering them annual returns of up to 42%.
Additional accusations state that Dalpour has been operating a Ponzi scheme since 2020, targeting domestic and international victims. If convicted, he could face up to 20 years in prison for wire fraud.