John Bigatton, a former promoter at BitConnect, pleaded guilty to one criminal charge related to providing unlicensed financial services.
Bigatton appeared before the Sydney District Court on May 16, where he admitted to providing unlicensed financial services on behalf of another person. This is in violation of section 911B(1) of Australia’s Corporations Act.
BitConnect was a financial service business and online cryptocurrency platform that offered investment opportunities through its website, including a product known as the Lending Platform. Investors were required to acquire BitConnect coin (BCC), a cryptocurrency token, to participate in this platform.
The Lending Platform allowed lenders to invest or “loan” BCC for fixed terms in exchange for promised high-interest rates. However, investors could not control their loans or withdraw their capital until the lending period ended.
In regards to his promotional activities, Bigatton advertised the now-defunct BitConnect Ponzi scheme on social media, in seminars across Australia, and in direct meetings with investors. He provided financial product advice without holding an Australian Financial Services licence or authorization to provide financial services.
These activities reportedly occurred on six occasions, including four seminars and two social media posts.
A sentencing hearing is reportedly scheduled for July 5.
A related charge of operating an unregistered managed investment scheme was withdrawn following Bigatton’s guilty plea to the primary charge.
The case is being prosecuted by the Commonwealth Director of Public Prosecutions following an investigation and referral by ASIC.
BitConnect’s shady past
BitConnect was shut down in 2018 after being accused of operating a Ponzi scheme that defrauded investors of millions of dollars. The platform promised unusually high returns on investments.
On Sept. 1, 2020, the Australian Securities and Investments Commission (ASIC) imposed a seven-year ban on Bigatton from providing financial services, effective from.
This ban follows ASIC’s investigation into Bigatton’s involvement as the Australian national promoter of the BitConnect scheme, which collapsed in early 2018, defrauding investors of significant sums.
The ban is part of ASIC’s ongoing efforts to crack down on fraudulent activities in the cryptocurrency space and to safeguard investors from potential scams.
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In January 2023, the U.S. federal district court in San Diego mandated that over 800 victims of the Bitconnect Ponzi scheme receive a portion of a $17 million restitution recovered from the $2.4 billion scam.
This came after a California judge ordered the funds to be distributed, marking a major milestone in the ongoing efforts to compensate those affected by the fraudulent cryptocurrency platform.
The $17 million in restitution was paid out from the $56 million forfeited by Glenn Arcaro, one of BitConnect’s top promoters. Arcaro had 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 uncovered a significant financial fraud case involving a Manhattan resident, Idin Dalpour, who allegedly orchestrated a multi-million-dollar Ponzi scheme linked to cryptocurrency, defrauding investors of $43 million.
Per a press publication on May 1, the Department of Justice revealed that Dalpour enticed investors with promises of high returns through investments in a Las Vegas hospitality business and a crypto trading operation, which ultimately turned out to be false.
Allegedly, Dalpour operated a classic Ponzi scheme, using funds from new investors to pay earlier investors while misappropriating the remainder for personal expenses, including gambling losses and private school tuition. The indictment suggests that Dalpour fabricated contracts and bank records to deceive investors, offering annual returns of up to 42%.
Further accusations indicate that Dalpour had been running the Ponzi scheme since 2020, targeting victims both domestically and internationally. If convicted, he faces up to 20 years in prison for wire fraud.
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