An Australian man, John Louis Anthony Bigatton, has pleaded guilty to promoting cryptocurrency lending services for the now-defunct crypto exchange BitConnect, a notorious entity allegedly operated as a Ponzi scheme. BitConnect collapsed in 2018 amid accusations of defrauding victims of more than $2.4 billion.
Illegal Promotion Activities
The Australian Securities and Exchange Commission (ASIC) stated that Bigatton promoted BitConnect’s services without holding an Australian Financial Services license or authorization. ASIC’s statement on 17 May highlighted that Bigatton, as BitConnect’s national promoter, offered financial product advice on six occasions across Australia, including four seminars and two social media posts.
“Mr Bigatton undertook promotional activities for BitConnect and the Lending Platform on social media, at seminars that he hosted at various locations around Australia, and through face-to-face meetings with investors,” ASIC declared.
Ponzi Scheme Allegations
BitConnect’s lending platform encouraged investors to buy BitConnect coin (BCC) through its website, promising high-interest returns for loaning BCC for a fixed period. However, once invested, investors could not control their loans or withdraw their money until the lending period ended. This structure allegedly allowed BitConnect to operate as a Ponzi scheme, using funds from new investors to pay returns to earlier investors.
The United States Internal Revenue Service (IRS) has detailed how BitConnect defrauded victims of over $2.4 billion. The platform launched in February 2016 and shut down in January 2018, with the founders disappearing with investors’ money.
Legal Proceedings and Sentencing
Bigatton’s sentencing hearing is scheduled for 5 July. The fallout from BitConnect’s collapse has seen ongoing legal actions, including a January 2023 order from the U.S. District Court for the Southern District of California for a $17 million restitution to the fraud victims. This decision has provided some relief to those affected by the multibillion-dollar scheme.
Despite the restitution efforts, the whereabouts of BitConnect’s founder, Satish Kumbhani, remain unknown, leaving many questions about the full extent of the fraudulent activities and the potential recovery of additional funds.
