DOJ Selling $56M Worth of Crypto to Compensate BitConnect Victims, Mt Gox Rehabilitation Plan Also Finalized

The timing and specific amount of the Mt. Gox repayments haven't been announced yet. Meanwhile, the DOJ describes the liquidation as the US's largest single recovery of crypto fraud.

The United States Department of Justice has seized $56 million worth of cryptocurrency that will be sold to compensate the victims of the BitConnect fraud.

This week, the DOJ announced that US District Judge Todd W. Robinson had granted the request to liquidate approximately $56 million in fraud proceeds seized from the self-described “number one promoter” of BitConnect, who consented to the seizure.

The agency described the liquidation as the largest single recovery of a crypto fraud by the United States to date.

According to court documents, Glenn Arcaro pleaded guilty to participating in the conspiracy to defraud BitConnect investors in the US and abroad, in which investors were fraudulently induced to invest over $2 billion.

Scheduled to be sentenced on Jan. 7, 2022, Arcaro is facing a maximum penalty of 20 years in prison.

To make victims of the BitConnect scheme whole, the government will begin the process of selling the crypto assets and holding the proceeds in USD. The seized proceeds will be custodied in crypto wallets which will then be used to provide restitution to the victims pursuant to a future restitution order by the court at sentencing.

Coming To An End

In other news, creditors of the defunct Bitcoin exchange Mt. Gox are now getting closer to receiving reimbursements under a plan that has become final and binding. With this, one of the longest-running sagas, which began in 2014 in the crypto world, is now coming to an end.

The rehabilitation plan filed in Tokyo court nearly a year ago was approved last month and has now been finalized.

According to a letter from a Japanese trustee Nobuaki Kobayashi, who is in charge of returning the funds to creditors, the timing and specific amount of the repayments hasn't been announced yet.

The announcement of finalization follows the approval by a “large majority” of creditors last month.

The Rehabilitation Trustee thanked all the involved parties for their support, leading to the plan “becoming final and binding” as per which repayments to rehabilitation creditors holding allowed rehabilitation claims will be made.

“An announcement will be made to rehabilitation creditors on the details of the specific timing, procedures, and amount of such repayments.”

While some feel the announcement of the payout might negatively affect the market, resulting in BTC falling under $59k, it is unlikely that reimbursement would happen anytime soon or at least this year, given that court proceedings take time.

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