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BitConnect former director admits to conspiring with other executives on Ponzi Scheme

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  • The former promoter of BitConnect Ponzi scheme has pled guilty to defrauding thousands of investors.
  • The court has asked him to refund the $24 million he earned in the process to investors. 

Glenn Arcaro, the former director and promoter of the BitConnect Ponzi scheme, has pled guilty to fraud charges. The former director pled guilty before US Magistrate Judge Mitchell Dembin in San Diego in connection to his role and now awaits sentencing scheduled for the 15th of November.  

The US Securities and Exchange Commission (SEC) charged BitConnect, along with its founder Satish Kumbhani, the former director, and Future Money Ltd. over the Ponzi scheme. The accused are facing charges of running illegal and unregistered securities offerings. 

Former BitConnect director pleads guilty to Ponzi Scheme 

 As the legal saga continues, the Department of Justice (DOJ) has revealed in a report published on the 1st of September that Arcaro has pled guilty. The former director and promoter admitted responsibility for conspiracy to commit wire fraud through the BitConnect Ponzi scheme. 

The DOJ stated:

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Glenn Arcaro of Los Angeles pleaded guilty today in federal court for his participation in a massive conspiracy involving BitConnect, a cryptocurrency investment scheme, which defrauded investors from the United States and abroad of over $2 billion. The BitConnect scheme is believed to be the largest cryptocurrency fraud ever charged criminally.

Arcaro used social media to reach a larger pool of investors who fell victim to the BitConnect Ponzi scheme. 

In addition, the DOJ press release said that Arcaro admitted to conspiring with others to “exploit” investors through fraudulent marketing of BitConnect’s proprietary coin offering and crypto exchange as a profit-making investment.

In addition, Arcaro confessed to conspiring with others to deceive investors about the company’s purported proprietary technology “BitConnect Trading Bot and Volatility Software.” The defendants convinced investors that the proprietary technology would generate returns after they use their money to trade on the volatility of crypto exchange markets. However, BitConnect operated a Ponzi scheme where the early comers are paid with money invested by the latter investors. 

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Arcaro leveraged on investors’ crypto interest

Commenting on the BitConnect Ponzi scheme matter, the Acting US Attorney Rand S. Grossman of the Southern District of California said Arcaro took advantage of investors’ interest in the crypto space. He added:

The Department of Justice will continue to protect the investing public and scrutinize the burgeoning cryptocurrency industry. To those who would be next in line to defraud the investing public, let this action by the Department of Justice stand as a stark cautionary tale. To the investing public, let this also serve as a cautionary tale to safeguard your money and invest wisely.

The DOJ further revealed that Arcaro earned up to 15 percent into BitConnect’s lending program. At the same time, he got payments for all investments through a “slush” fund.

Special Agent in Charge of the case, Eric Smith of the FBI’s Cleveland Field Office, also commented on the ongoing issue. Smith referred to the fact that Arcaro has accepted responsibility for all his fraudulent actions. The FBI executive said the former director took investors’ money while deceiving them to expect exorbitant returns. 

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As Arcaro awaits sentencing later this year, the court has ordered him to pay the money he earned from the fraudulent acts. Specifically, the former director will repay $24 million to the affected investors.

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Crypto Exchange

Genesis tests end-of-day pricing for institutional crypto futures product

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Cryptocurrency brokerage firm Genesis Global Capital has announced the completion of a first-of-a-kind trade that will pave the way for new institutional crypto futures products.

Genesis has executed the first-ever over-the-counter (OTC) block trade of a Basis Trade at Index Close (BTIC) transaction using Bitcoin futures contracts issued b Chicago Mercantile Exchange (CME). The trade was made in collaboration with derivatives market maker Akuna Capital according to a Sept. 26 announcement.

This is the first time a BTIC has been used for cryptocurrencies as it is more commonly used in equities markets. This form of trading allows investors to buy and sell futures contracts with prices based on the end-of-day close of the index.

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CME Group Global Head of Equity Index and Alternative Investment Products, Tim McCourt, said that the product was the next step in offering greater exposure to CME’s Bitcoin derivatives and Ethereum futures, with the Ether contracts having launched in February. He elaborated on the advantages of this new trading vehicle, explaining:

“BTIC enables market participants to more efficiently trade the basis while providing a regulated marketplace for real-time price discovery and enhanced trading precision for institutional participants who want to optimize holdings between the futures and spot markets.”

Genesis provides liquidity to CME Group for its BTC and ETH futures and options products.

In May, the CME launched micro Bitcoin futures which are contracts worth 0.1 BTC. The offering was designed to allow institutional traders to hedge their risks to crypto assets.

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By the end of June, the product had surpassed a million traded contracts suggesting that there is a high demand for smaller positions in crypto among institutional investors still testing the waters. This latest product is another example of diversifying the options for well-heeled investors to gain exposure to crypto markets.

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Crypto Exchange

Huobi outlines plan for Chinese investors after halting crypto trading

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The uncertainties sparked by China’s blanket ban on crypto trading have taken a downturn as homegrown crypto exchanges such as Huobi take proactive measures to protect and return existing investments residing on the mainland. 

Speaking to Cointelegraph in this regard, Du Jun, co-founder of Huobi Group, said that the crypto exchange wants to ensure the safety of the users’ assets as part of its social responsibility:

“Customers will be able to transfer their assets to other exchanges or wallets over the next few months. Specific measures and operating rules will be outlined in future announcements.”

Citing a possibility of a communication gap with Chinese investors amid the ban, the crypto exchange is also working on other ways to protect customer assets until the users can move them to offshore exchanges or wallets.

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Chinese investors amounted to more than 30% in terms of trading volumes prior to the crypto ban, but as Jun suggests, Huobi has seen increased adoption in the Southeast Asian and European markets. However, the exchange expects that “any short-term impact on Huobi revenues will be mitigated as our global business continues to grow.”

While observing the ban on crypto trades and mining as imposed by the People’s Bank of China and other Chinese regulatory authorities, Jun plans to double down on Huobi’s compliance efforts and continue to build compliant operations on a global scale.

Crypto exchanges in mainland China, including Huobi, began stopping new customer registrations soon after a new crypto ban became effective on Friday. Huobi later announced that all Chinese accounts from the mainland will have been closed down by 24:00 UTC+8 on Dec. 31, 2021. 

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Historically, China has been responsible for the lion’s share of Bitcoin (BTC) mining. Given the lack of support from the ruling government, Chinese miners have continued to move off-shore into crypto-friendly jurisdictions.

According to a recent Cointelegraph report, the latest ban marks the Chinese regulators’ 19th attempt to curb Bitcoin and cryptocurrencies in the past 12 years. While the decision to ban crypto trades in China caused a few unwary investors to momentarily panic-sell, Bitcoin’s price continues to show bullish signals, given the proactive support from crypto exchanges and users across the globe.

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Binance

Binance Suspends Spot Trading and Fiat Channels in Singapore

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Binance.com, the global cryptocurrency exchange platfrom announced the suspension of spot trading, fiat purchase channels, liquid swap, and fiat deposit functions. The suspension would come into effect from 26th October. The exchange also requested Singapore users to withdraw their tokens and cease their trades by the effective date. The exchange in its official press release said,

“As the market leader, Binance constantly evaluates its product and service offerings. We will be restricting Singapore users in respect of the Regulated Payments Services in-line with our commitment to compliance. Users in Singapore are advised to cease all related trades, withdraw fiat assets and redeem tokens by Wednesday, 2021-10-26 04:00 AM UTC (12:00 PM UTC+8) to avoid potential trading disputes.”

Binance’s trouble in Singapore began after the Securities Commission in the country put Binance.com under Investor Alert List. In the wake of the first regulatory action, Binance ceased certain product offerings in the country before suspending key crypto trading features altogether. It is also important to note that Binance’s Sister company in Singapore has applied for a regulatory license and has been granted an exception until a decision is made on its filing despite the global platform facing regulatory scrutiny.

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Binance Continue to Face Regulatory Setbacks

Singapore was considered to be the next home for Binance after facing regulatory scrutiny from nearly a dozen countries. However, the recent series of events suggest Singapore regulators are also going after the global exchange despite harbouring its sister company. The world’s leading exchange’s regulatory troubles seem to meet no end as more countries continue to enforce action against it.

The crypto exchange has taken several decisions to mend its ways with regulators over the past couple of months, right from suspending derivative offerings in several countries to on-boarding regulatory experts. However, that hasn’t changed much, now the crypto exchange plans to establish a centralized headquarters and also looking for a change of CEOs if that can help.

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