Former BitConnect promoter John Pegaton has pleaded guilty to one felony count of providing unlicensed financial services.
Pegaton Back He appeared before the Sydney District Court on May 16, where he admitted providing unlicensed financial services on behalf of another person. This is a breach of section 911B(1) of the Australian Corporations Act.
BitConnect was a financial services company and online cryptocurrency platform that offered investment opportunities through its website, including a product known as the Lending Platform. Investors were required to have BitConnect Coin (BCC), a cryptocurrency token, to participate in this platform.
The lending platform allowed lenders to invest in or “lend” to BCC on fixed terms in exchange for promised high interest rates. However, investors could not take control of their loans or withdraw their capital until the lending period expired.
In connection with his promotional activities, Bigatton advertised the now-defunct BitConnect Ponzi scheme on social media, at seminars across Australia, and in face-to-face meetings with investors. He provided advice on financial products without holding an Australian financial services license or authorization to provide financial services.
These activities reportedly occurred on six occasions, including four seminars and two social media posts.
The sentencing hearing is reportedly scheduled for July 5.
A related charge of operating an unregistered managed investment scheme was withdrawn following Bigatton's guilty plea to the underlying charge.
The case is being prosecuted by the Commonwealth Director of Public Prosecutions following investigation and referral by ASIC.
BitConnect's suspicious past
BitConnect was shut down in 2018 after it was accused of running a Ponzi scheme that defrauded investors of millions of dollars. The platform promised unusually high returns on investments.
On 1 September 2020, the Australian Securities and Investments Commission (ASIC) announced imposed A seven-year ban on Bigatton from providing financial services, effective.
The ban follows an ASIC investigation into Bigatton's involvement as an Australian national promoter of the BitConnect scheme, which collapsed in early 2018, defrauding investors of large sums.
The ban is part of ASIC's ongoing efforts to crack down on fraudulent activities in the cryptocurrency space and to protect investors from potential scams.
In January 2023, the US Federal District Court in San Diego ruled that more than 800 victims of the Bitconnect Ponzi scheme would receive part of the $17 million in compensation recovered from the $2.4 billion scam.
This came after a California judge ordered the funds to be distributed, marking a major milestone in ongoing efforts to compensate those harmed by the fraudulent cryptocurrency platform.
The $17 million in compensation was paid out of the $56 million confiscated by Glenn Arcaro, a major BitConnect promoter. Arcaro pleaded guilty to a charge of conspiracy to commit wire fraud in September 2021 and was later sentenced to 38 months in prison for his role in the scheme.
In related news, the FBI uncovered a major financial fraud case involving Manhattan resident Eden Dalboer, who allegedly organized a multi-million dollar Ponzi scheme linked to cryptocurrency, defrauding investors of $43 million.
For every press Publishing On May 1, the Department of Justice revealed that Dalbor lured investors with promises of high returns through investments in a Las Vegas hospitality business and a cryptocurrency trading operation, which ultimately turned out to be false.
Dalbour allegedly operated a classic Ponzi scheme, using money from new investors to pay previous investors while embezzling the rest for personal expenses, including gambling losses and private school fees. The indictment alleges that Dalbour fabricated contracts and bank records to deceive investors, offering annual returns of up to 42%.
Other charges state that Dalbor has been running a Ponzi scheme since 2020, targeting victims domestically and internationally. If convicted, he faces up to 20 years in prison for wire fraud.