The Securities and Exchange Commission (SEC) has obtained a judgment against the the lead promoter of alleged Ponzi scheme BitConnect, according to a new release from the regulator.
The United States District Court for the Southern District of New York entered judgments against Glenn Arcaro, BitConnect's lead U.S. promoter. Arcaro allegedly promoted BitConnect to retail investors in the U.S. and used his company, Future Money Ltd., to lure prospective investors to the scheme.
The SEC first filed the complaint against Arcaro, BitConnect founder Satish Kumbhani and Future Money in September of this year. They claimed the group conducted a fraudulent and unregistered securities offering that reached $2 billion through BitConnect's lending program.
"Arcaro and Arcaro Promoters — none of whom was registered with the Commission as a broker-dealer, or associated with a registered broker-dealer — touted the supposedly lucrative potential of investing into the Lending Program to potential retail investors, through 'testimonial'-style videos they created and published on YouTube, sometimes multiple times a day, with referral links to the Lending Program," said September's complaint.
Arcaro has since pleaded guilty. Today, he and Future Money have consented to the entry of judgments which has them permanently prohibited from offering, operating or participating in certain marketing or sales programs and from participating directly or indirectly in a digital asset securities offering. The judgments also order Arcaro and Future Money to pay back any ill-gotten gains with prejudgment interest. He may also face a civil penalty to be determined by the court at a later date if the SEC presses the issue in an additional motion.
Arcaro is not the first BitConnect promoter to receive a judgment. Michael Noble and Joshua Jeppesen are also on the hook for $3.5 million and 190 bitcoin (worth $9.1 million at the time of the decision) as part of their case, and they are similarly barred from participating in digital asset offerings in the future.