U.S. to sell cryptocurrency worth $56 million after record seizure in BitConnect fraud case

Authorities said the scheme is believed to be the largest cryptocurrency fraud ever prosecuted.

The cryptocurrency being sold was seized from 20 digital wallets controlled by Arcaro, who pleaded guilty Sept. 1 to conspiracy and wire fraud related to the scheme to fraudulently market BitConnect's coin offering and digital currency exchange.

"In truth, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors," the Justice Department said in September.A federal judge last Friday authorized the Justice Department and the U.S. Attorney's Office for the Southern District of California to liquidate the cryptocurrency seized from Arcaro, who consented to the seizure.

The SEC in its lawsuit said that BitConnect was an unincorporated organization that registered four companies in the United Kingdom, all of which are now either defunct or dissolved.

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