• The US Justice Department will sell $56 million in cryptocurrencies it acquired as part of a huge Ponzi scheme lawsuit against a man who pushed the BitConnect crypto lending platform.
• Thousands of people in the United States and overseas are said to have lost more than $2 billion in bitcoin as a result of the BitConnect fraud.
• The Securities and Exchange Commission sued BitConnect, its founder Satish Kumbhani, and Glenn Arcaro, who was the lead promoter of BitConnect in the United States, in September.

The United States Justice Department announced On tuesday that it will sell $56 million in cryptocurrency seized as part of a massive Ponzi scheme case against a man who promoted the offshore crypto lending programme BitConnect authorities.

The currency's liquidation follows "the greatest single recovery of a cryptocurrency fraud by the United States to date," according to the Justice Department.

The money will be used to compensate victims of the BitConnect fraud.

The Justice Department encouraged victims of the scam to file claims for reimbursement from the sale at https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twr.

From January 2017 to January 2018, that scam is said to have duped thousands of people in the United States and abroad out of more than $2 billion in bitcoin by promising investors returns of up to 40% per month, allegedly generated by BitConnect's purported volatility software trading bot.

"These claims were a sham," the Securities and Exchange Commission said in a September lawsuit against BitConnect, its founder Satish Kumbhani, and Glenn Arcaro, a Los Angeles man who was BitConnect's lead promoter in the United States.

"As Defendants knew or carelessly disregarded," the SEC stated in the lawsuit, "BitConnect did not deploy investor money for trading using its alleged Trading Bot."

"BitConnect and Kumbhani syphoned off investors' funds for their own benefit, as well as the benefit of their associates, by transferring those funds to digital wallet addresses controlled by Kumbhani, Arcaro, other promoters, including the Arcaro Promoters, and other unknown individuals," according to the report.

The scheme is thought to be the largest cryptocurrency fraud ever prosecuted, according to authorities.

The cryptocurrency being sold was seized from Arcaro's 20 digital wallets, which he controlled during the scheme to fraudulently market BitConnect's coin offering and digital currency exchange. Arcaro pleaded guilty to conspiracy and wire fraud on Sept. 1 in connection with the scheme to fraudulently market BitConnect's coin offering and digital currency exchange.

Arcaro, 44, was paid a total of $24 million in commissions and other rewards.

Arcaro admitted that he and others misled investors about BitConnect's ostensibly exclusive technology, branded "BitConnect Trading Bot" and "Volatility Software," by suggesting that trading on volatility in bitcoin exchange markets would create huge investment rewards.

"In actuality, BitConnect operated a textbook Ponzi scheme by compensating early BitConnect investors with money from later investors," the Justice Department announced in September.

Arcaro faces a potential sentence of 20 years in prison if convicted. On January 7, he will be sentenced.

Last Friday, a federal judge gave the Justice Department and the U.S. Attorney's Office for the Southern District of California permission to liquidate the bitcoin seized from Arcaro, who had agreed to the seizure.

BitConnect was an unincorporated company that registered four corporations in the United Kingdom, all of which are now defunct or dissolved, according to the SEC's lawsuit.

The whereabouts of Kumbhani, a 35-year-old Indian citizen, remain unknown, according to the SEC.