John Bigatton, a former promoter of the notorious cryptocurrency platform BitConnect, has pleaded guilty to a criminal charge of providing unlicensed financial services. The plea was entered on May 16 in Sydney District Court, where Bigatton admitted to violating section 911B(1) of Australia’s Corporations Act by offering financial services without the necessary licensing.
BitConnect’s Controversial Lending Platform
BitConnect, a financial service business and online cryptocurrency platform, enticed investors with its Lending Platform, which required participants to acquire BitConnect Coin (BCC). Investors could “loan” BCC for fixed terms in exchange for high-interest rates. However, they had no control over their loans or the ability to withdraw their capital until the lending period concluded.
Bigatton was actively involved in promoting this scheme. He advertised BitConnect through social media, conducted seminars across Australia, and held direct meetings with investors. Crucially, he did so without holding an Australian Financial Services license or any authorization to provide financial services, which constitutes the basis for his criminal charge. His promotional activities reportedly occurred on six occasions, including four seminars and two social media posts.
Legal Proceedings and Penalties
Following his guilty plea, Bigatton is scheduled for a sentencing hearing on July 5. A related charge of operating an unregistered managed investment scheme was withdrawn after he admitted guilt to the primary charge. The case is being prosecuted by the Commonwealth Director of Public Prosecutions, following an investigation by the Australian Securities and Investments Commission (ASIC).
The Downfall of BitConnect
BitConnect was shut down in 2018 amid accusations of operating a Ponzi scheme that defrauded investors of millions. The platform’s promise of unusually high returns on investments was revealed to be a scam. As a result, in September 2020, ASIC imposed a seven-year ban on Bigatton from providing financial services, part of ASIC’s ongoing effort to crack down on fraudulent activities in the cryptocurrency sector and protect investors from scams.
In a significant move towards restitution, a U.S. federal district court in San Diego ordered in January 2023 that over 800 victims of the BitConnect Ponzi scheme receive a portion of a $17 million recovery from the $2.4 billion scam. This restitution was part of the $56 million forfeited by Glenn Arcaro, one of BitConnect’s top promoters, who had pleaded guilty to conspiracy to commit wire fraud in September 2021 and was sentenced to 38 months in prison.
Related Financial Fraud Cases
In a related development, the FBI uncovered a significant financial fraud case involving Idin Dalpour, a Manhattan resident accused of orchestrating a multi-million-dollar Ponzi scheme linked to cryptocurrency. Dalpour allegedly defrauded investors of $43 million by promising high returns through investments in a Las Vegas hospitality business and a crypto trading operation, both of which were fraudulent. If convicted, Dalpour faces up to 20 years in prison for wire fraud.
This series of high-profile cases underscores the importance of regulatory oversight in the cryptocurrency market and the severe consequences for those who engage in fraudulent activities.
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