John Bigatton, a Sydney man, has admitted guilt to promoting a cryptocurrency Ponzi scheme that swindled investors out of a staggering $3.6 billion. Bigatton, from Carss Park in New South Wales, pleaded guilty in Sydney District Court to acting as an unlicensed financial advisor while spruiking BitConnect’s Lending Platform in late 2017 and early 2018.
BitConnect, operational from 2016 to 2018, offered a seemingly lucrative investment opportunity through its Lending Platform. Investors were enticed to buy BitConnect’s cryptocurrency BCC with the promise of high-interest rates in exchange for “loaning” their BCC for fixed terms. The company claimed its proprietary technology generated guaranteed returns through cryptocurrency exchange markets, boasting an average daily compounding interest of 1%.
However, this was a house of cards. Investors had no control over their loaned BCC and couldn’t withdraw their funds until the lending period ended. The truth was far more sinister: BitConnect employed a classic Ponzi scheme, using funds from new investors to pay out earlier ones.
Crypto Scam Involving BitConnect Promoter
BitConnect’s strategy relied heavily on high-profile figures promoting its “lucrative” investment opportunities. Bigatton, who served as the Australian national representative for BitConnect from August 2017 to January 2018, played a key role in this scheme.
According to the Australian Securities and Investments Commission (ASIC), Bigatton actively promoted the Lending Platform through social media posts, seminars across Australia, and even in face-to-face meetings with potential investors.
Bigatton’s actions constituted providing financial advice without a valid Australian Financial Services (AFS) license. While a related charge of operating an unregistered managed investment scheme was dropped after his guilty plea, the consequences for Bigatton are significant. The Commonwealth Director of Public Prosecutions, following ASIC’s investigation and referral, will sentence Bigatton on July 5, 2024.
The Aftermath of BitConnect
Bigatton’s story serves as a stark reminder of the dangers associated with unregulated cryptocurrency investments and the allure of Ponzi schemes. In 2020, ASIC banned Bigatton from providing financial services for seven years due to his involvement in the BitConnect scheme.
BitConnect itself collapsed in January 2018 after its cryptocurrency plummeted by 92%. This downfall came amidst legal actions from the Texas State Securities Board, which labeled BitConnect a Ponzi scheme for its lack of transparency and misleading information.
The fallout from BitConnect continues. The scheme’s founder, Satish Kumbhani, was indicted in San Diego in 2022. While a US court awarded $25 million in compensation to 800 victims in 2023, thousands more will likely never see their money again.
Glenn Arcaro, a US promoter of BitConnect, also pleaded guilty to wire fraud conspiracy charges in 2021 and was ordered to repay $36 million to scammed investors, along with a 38-month prison sentence.
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