Okay, I want you to close your eyes for a second.
Just picture this. It's a stage. It's October
2017. We're in Pattaya, Thailand. The air is,
you know, thick. It's humid. I can already feel
it. Yeah, right. There are strobe lights just
cutting through the dark. There's this heavy
bass music that's just thumping in your chest.
And there's a man in the center of the spotlight
who is, um... Well, he's practically vibrating
with energy. Oh, I know exactly who you're talking
about. The man, the myth, the living meme. He
grabs the microphone. He's sweating right through
his suit. And he doesn't just speak to the crowd.
He unleashes this guttural, cracking, high -pitched
scream that I think is permanently burned into
the auditory cortex of anyone who used the internet
in 2017. Wassup, wassup, wassup, wassup, bitkiness,
cct. There it is. It is iconic. I mean, it is.
arguably the most famous or maybe infamous soundbite
in the entire history of the cryptocurrency industry.
It's like the I have a dream speech of financial
disasters. That's the perfect way to put it.
Because if you spend any time online, you've
seen the remixes, you've seen the parodies. It's
this moment of just pure, hilarious cringe. It
really is. It's a bald guy from New York City
just losing his absolute mind with excitement.
But, and this is the pivot, this is the really
important part for our Deep Dives today. When
I look at that video now, I don't laugh. No.
And frankly, you shouldn't. It's not funny anymore.
Not at all. Because that scream wasn't just some
funny guy on a stage in Thailand. That scream
was the sound of a financial catastrophe happening
in real time. It was the sound of thousands and
thousands of people about to lose their life
savings. That is the perfect way to frame it.
It is so easy to get distracted by the spectacle,
by the sheer absurdity of the presentation. But
if you strip away the Internet humor, if you
get rid of the memes, what you are looking at
is one of the most devastating financial frauds
of the last decade. And we are talking about
staggering numbers here. This wasn't a small
-time operation. Oh, not at all. We are. The
Securities and Exchange Commission, the SEC,
they eventually put a number on it. They estimated
the size of this fraud at around $2 .4 billion.
A billion. With a B. With a B. It's a number
that's almost hard to comprehend. It is honestly
hard to reconcile those two things. the funny
screaming man from the meme, and a multi -billion
dollar federal crime. But that is exactly our
mission for this deep dive. We are going to go
behind the meme. We need to really understand
how an open source cryptocurrency, something
that looked... you know, legitimate on paper
morphed into a history making Ponzi scheme. And
to do that, we have to look under the hood. We
can't just say it was a scam and move on. We
need to take apart the specific mechanics. We
need to look at this so -called lending platform
they built and the the very mysterious trading
bot that was supposed to be the engine of infinite
wealth. And we're going to trace that timeline
from BitConnect being a top 20 cryptocurrency.
which is just wild to even think about now, all
the way to a single day in January 2018 where
it lost 92 % of its value. It's just gone, evaporated.
Yeah. Our source material for this whole discussion
is the comprehensive Wikipedia record. It covers
the history, the collapse, the legal proceedings,
and, of course, the cultural impact. It paints
a very, very grim picture, honestly. It really
does. It serves as a master class in critical
thinking. Or maybe... a masterclass in how easily
critical thinking can be suspended when greed
takes the wheel. So let's start at the very beginning,
before the scream, before the crash. If I was
a crypto investor back in 2016 and I'm looking
for the next big thing, what was BitConnect?
Because it wasn't just a website with a donate
button, was it? It had a ticker symbol. It was
on the charts. Right. And that's a crucial point.
BitConnect, ticker symbol BCC. It launched around
2016. And this is vital to understanding how
so many people fell for this. BitConnect did
a very, very good job of establishing what I
call the veneer of legitimacy. Meaning it looked
like the real deal from the outside. Exactly.
It was presented as an open source cryptocurrency.
Now, in the tech world, open source is usually
a badge of honor. It implies transparency. It
implies here's our code. You can check it yourself.
We have nothing to hide. So they actually released
the code for the coin itself. You could go on
like a GitHub and see it. Yes. The source material
notes that it used a hybrid timestamping scheme.
It was a mix of proof of stake and proof of work.
These are legitimate, established consensus mechanisms.
OK, let's pause there for a second. I don't want
to get totally bogged down in the deep technical
weeds. But for anyone listening who isn't, you
know, mining Bitcoin in their basement, what
does that hybrid model actually mean? And why
does that specific choice make it look so legitimate?
Sure. So proof of work is the model that Bitcoin
uses. You have computers, we call them miners,
burning a ton of electricity to solve these incredibly
complex math problems. It's what secures the
network and creates new coins. It's hard work,
hence the name. Right. That's the one everyone's
heard of. Then you have proof of stake. That's
different. Instead of computational power, you
validate transactions based on how many... Coins
you already hold and are willing to stake as
collateral, you have a stake in the network.
So you earn interest for helping secure it. It's
much more energy efficient. And BitConnect said
they were using both of these. They used a hybrid
of both. And here's the kicker. Technologically,
the coin itself, the BCC token, it actually functioned.
It had a working blockchain. You could download
a wallet. You could send BCC to me. I could receive
it. It would confirm on the network. So the car
had an engine. It wasn't just a cardboard cut
out of a car. It could actually drive down the
road. The car could drive. And that is precisely
why it was so dangerous. Right. The problem wasn't
the car. The problem was the dealership and the
absolutely insane financing plan they were selling
along with the car. The coin wasn't the product.
The coin was just the poker chip for the casino
they built on top of it. Right. Because nobody
was just buying Big Connect coin to hold it in
a wallet and look at it. They were buying it
for the value proposition. Correct. The core
pitch of BitConnect, the thing that drove the
mania, was the lending platform. This was the
hook. This was the whole game. OK, so walk me
through the user experience here. It's the late
2017. I've got some Bitcoin, real actual Bitcoin
that I bought on a legitimate exchange. Right.
I hear about BitConnect. What do I do? OK, so
step one, you send your precious Bitcoin. to
the BitConnect exchange, a one -way trip. Step
two, you use that Bitcoin to buy their proprietary
BitConnect coin, BCC. Now you are holding their
chips. Okay, so I've swapped my gold for their
casino tokens. I'm in their ecosystem now. Exactly.
Now, step three, and this is the crucial part.
You lend those BCC tokens back to the platform.
You lock them up. You freeze them for a set period.
Maybe it's 120 days. Maybe it's 299 days. It
depended on how much capital you put in. You
literally cannot touch that principal investment.
And in exchange for letting them hold my money
hostage. What do I get? In exchange, they promised
you interest payments. But this wasn't just put
it in a savings account for 0 .5 % a year interest.
This is where the physics of finance just completely
break down. What kind of numbers are we talking
about here? Because people were losing their
minds over this. The interest was calculated
daily. Daily. Not annually. Daily. Daily. And
the rates they were citing? The sources mention
these impossibly high payouts. We are talking
about an average of around 1 % daily interest.
Okay. I want to stop here. I really want to dig
into the math of 1 % daily interest because I
think our brains, you know, we're wired for linear
progression. We hear 1 % and we think, oh, that's
not much. That's a penny on the dollar. We are
terrible at intuitively understanding exponential
math. It's a genuine blind spot for the human
brain. We just can't process it. I ran a quick
calculation on this before we started just to
see what that actually looks like in practice.
Let's say I put $1 ,000 into this system. And
let's be conservative. Let's say I just take
the interest out every day and put it in my pocket.
That's $10 a day. Right. 365 days a year. That's
$3 ,650 in a year. That's a 365 % annual return,
which is already insane. That's already beating
the greatest investors in human history by a
factor of 10 or 20. But that's not what people
did. That wasn't the real allure. They compounded
it. Right. They hit the little reinvest button
on the dashboard. Yeah. So if you compound 1%.
Daily. A thousand dollars becomes what at the
end of year one. It creates a curve that goes
vertical. If you reinvest every single day, that
initial one thousand dollars becomes roughly
thirty seven thousand seven hundred dollars at
the end of one year. From one thousand to over
thirty seven thousand. in 12 months. And people
were seeing this on their dashboards. They were
watching it happen. What about two years? If
you just let it ride for two years? I'm glad
you asked. It's roughly $1 .4 million from a
$1 ,000 investment. Okay. That should be the
red flag right there, shouldn't it? I mean, that's
the only red flag you need. If you could turn
$1 ,000 into over a million in two years with
zero effort and zero risk, why would anyone work?
Why would banks even exist? That is the ultimate
question. It defies the laws of thermodynamics
in economics. Money cannot be created out of
thin air at that rate. If you have a machine
that prints money like that, you don't share
it. You don't ask strangers on the Internet for
their hundred dollar investments. You just run
the machine yourself and become the richest person
on Earth in about three years. But they had an
answer for that, didn't they? They didn't just
say, trust us, it's magic. They had a story,
a secret sauce. They did. And this is where we
get to the infamous trading bot. The magical
money printing trading bot. The sources describe
this as the most controversial and also the most
essential piece of the whole fiction. The claim
was that they had developed this proprietary
volatility software. Volatility software. Yeah.
Sounds very technical. Very Wall Street. It does.
It sounds sophisticated. The pitch was this.
Bitcoin is volatile. It goes up and down violently.
Our bot trades that volatility. It buys low and
sells high thousands of times a day, faster than
a human ever could. And because the crypto market
is so crazy, there is always profit to be made,
regardless of whether the market is going up
or down. So it's the classic black box defense.
Don't worry your pretty little head about how
it works. It's a super secret algorithm. It's
AI. It's too complicated for you to understand.
Just look at the dashboard. Exactly. It's a very...
common trope in financial fraud. You look at
Bernie Madoff. He had a split strike conversion
strategy that nobody was ever allowed to see.
In BitConnect's case, the trading bot was the
black box. You couldn't see the trades. You couldn't
audit the code. You just saw a number on a screen
saying, congratulations, you made $400 today.
And that number on the screen is a powerful drug.
It is a hallucinogen. When you log in every single
morning and you see your balance growing like
that, you stop asking questions. You stop wondering
how it works and you just get excited that it
is working. But I have to ask the obvious question,
was there a bot? No. There was no bot. There
was no volatility software. There was nothing.
So where was the money coming from? If I put
in $1 ,000 and six months later I cash out $5
,000, who paid me? The person who joined the
day after you, it was a textbook Ponzi scheme.
The profits being paid out to the early investors
were simply the principal deposits of the new
investors. I pay Paul with the money I just took
from Peter. Precisely. And this is why the structure
had to include that aggressive multi -level marketing
or MLM component. It wasn't just a feature. It
was a requirement for survival. Right. The referral
bonuses. Yeah. That makes so much sense now.
A Ponzi scheme is like a shark. If it stops swimming,
it dies. If new money stops flowing in, the whole
thing collapses instantly because there is no
underlying value generation. So they had to incentivize
the users to become the sales force. Which explains
the whole YouTube phenomenon around Big Connect.
It wasn't just people sharing a cool investment
tip. It was people actively trying to get their
commission. You had grandmothers, college students,
random people recording videos in their cars,
all shouting, join my team, use my link. They
were weaponized promoters. The source mentions
a tiered structure. If you bring in someone,
you get a percentage of their deposit. If they
bring in someone, you get a smaller percentage
of that and so on. It turns the victims into
the perpetrators in a way. It does. It's a very
sinister mechanism. You aren't just losing your
own money. You are actively encouraged to drag
your friends and your family down with you. It
spreads like a virus. Now, I want to touch on
one other mechanism that I found really interesting
in the research, the liquidity trap. Because
they didn't pay you in Bitcoin and they didn't
pay you in dollars. This is subtle, but it's
the absolute key to how they kept the illusion
going for as long as they did. When your dashboard
said you earned interest, it showed that value
in U .S. dollars. You earned $50. but you couldn't
withdraw dollars. So I have a number on a screen
that says $50. How do I turn that into something
I can buy groceries with? Well, first, you have
to convert that $50 balance into... BCC the BitConnect
coin at whatever the current market rate was.
Then you have to take that BCC and sell it on
their own internal exchange for Bitcoin. And
then you could finally move the Bitcoin to an
external exchange and cash out to your bank.
So to get your profits out, you have to first
buy their coin. Yes. The liquidity of the BCC
cryptocurrency was effectively funding users'
ability to exchange their earnings. As long as
new people were buying BCC to get into the lending
program to start their loans, the price of BCC
kept going up. Wow. It's a self -fulfilling prophecy.
The scam itself creates the demand for the token,
which artificially inflates the price of the
token, which in turn makes the scam look even
more successful and legitimate. It's a perfect
circle of fraud. Until the music stops. And the
music started to get a little dissonant towards
the end of 2017. Which brings us to the next
section of our outline. The walls close in. Because
you can't run a multi -billion dollar fraud this
loudly forever without someone somewhere noticing.
No, you cannot, especially not when you're holding
massive conferences in Thailand and screaming
about it on YouTube. The first major blow came
from the United Kingdom. On November 7th, 2017,
the UK Registrar of Companies issued a strike
off notice. A strike off notice. That sounds
pretty serious. What does that mean in practice?
It's basically the government saying. We don't
think you're a real company. You have two months
to prove your legitimacy, to show us your books,
or we are forcibly dissolving you and seizing
any assets we can find in our jurisdiction. Two
months? That is a ticking clock. That must have
set off alarm bells everywhere. It should have.
But here is the fascinating and terrifying thing
about crowd psychology. The UK warning comes
out in November. But the price of BitConnect
didn't crash. In fact, it kept going up. Wait,
really? The government of a major Western country
says this looks fake and people just kept buying.
Not only did they keep buying, the price of the
BCC coin hit its all -time high in December of
2017, a full month after the UK warning. It reached
nearly $463 per coin. That is just wild. It's
like standing on the deck of the Titanic, seeing
the iceberg dead ahead, and deciding to buy an
upgrade to a better cabin. Greed is a powerful
blinder. And you have to remember the context.
The crypto market as a whole was in an absolute
frenzy in late 2017. Bitcoin was rocketing towards
$20 ,000 for the first time. People felt invincible.
They dismissed the UK warning as FUD fear, uncertainty
and doubt. Right. The classic crypto excuse.
They said the government just doesn't understand
the tech. They're old. They're slow. They don't
understand the magic of the bot. Exactly. But
then the United States got involved. And when
U .S. regulators decide to step in, things...
tend to move a lot faster. And specifically,
the great state of Texas got involved. January
3rd, 2018. This is the critical date. This is
the beginning of the end. The Texas State Securities
Board issued an emergency cease and desist order.
And Texas doesn't really mince words, do they?
They do not. They didn't just say this looks
suspicious. They explicitly called it a Ponzi
scheme. They cited failings in transparency regarding
how user earnings were generated. They said the
statements being made by promoters were materially
misleading. And most importantly, they pointed
out that BitConnect was not registered to sell
securities. Which is a huge deal. If you're selling
an investment that pays people interest, that's
a security. You have to register with the SEC
or state boards. You can't just operate in the
shadows like that. Exactly. And almost simultaneously,
the North Carolina Secretary of State Securities
Division issued their own warning for the same
reason. So now you have pressure mounting from
two major U .S. jurisdictions on top of the ticking
clock from the U .K. It's early January 2018.
U .K. deadline is looming. Texas is saying stop
immediately. North Carolina is saying stop immediately.
The pressure inside that organization must have.
been immense. They knew there was no trading
bot to show the regulators. The game was up.
And that leads us directly to the collapse. And
it happened very, very quickly. So walk us through
those few days in mid -January, because this
wasn't a slow decline. This was a cliff dive.
January 16th and 17th, 2018, the BitConnect administrators
posted an announcement on their website. They
were closing the earning platform and the cryptocurrency
exchange operation. Effective immediately. Just
like that, flipping a switch and pulling the
plug. Pulling the plug. They cited the bad press
and the regulatory pressure from Texas and North
Carolina as the reasons. They effectively tried
to frame it as the mean old government is making
us close our wonderful lending platform. Sorry,
guys. But wait a minute. If they close the platform,
what happens to all the money people had loaned
them? All that Bitcoin that people had locked
up for 299 days, that's billions of dollars.
Ah, yes. This brings us to the refund. And I
want you to hear the huge air quotes around that
word. BitConnect announced they would refund
all outstanding loans. OK, that sounds fair.
I mean, if I gave them $10 ,000 worth of Bitcoin
and they give me $10 ,000 back, then no harm,
no foul, right? It sounds fair until you look
at how they did it. This is the final brutal
exit scam mechanism. And it is diabolically clever.
They didn't give people back the Bitcoin they
had originally invested. They calculated the
dollar value of your loan at that moment. So
let's say you had a $10 ,000 active loan on the
platform. Okay. My dashboard says I have a balance
of $10 ,000. They paid you back that $10 ,000
in their own coin, BCC. Okay. I'm still following,
but I'm getting a bad feeling about this. You
should. Here is the catch. They determine the
exchange rate. They valued the BCC they were
giving you at roughly $363 .62 per coin, which
was the market average over the last few days
before they announced the closure. So they give
me roughly 27 BCC coins and they say, here you
go. These are worth $10 ,000. Good luck to you.
Exactly. But now imagine the situation. Every
single user on the platform has just received
their entire refund in DCC at the exact same
moment. The platform is closing. The news is
out everywhere that it's a scam. What does every
single person on earth try to do with those coins?
They sell. Instantly. Everyone hit sell at the
same time. It's a bank run on a global scale.
It's a panic sale of epic proportions. Millions
of coins hit the open market instantly. And who
is on the other side of that trade? Who is buying?
Nobody. Absolutely nobody. Nobody. The demand
drops to zero. The supply shoots to infinity.
The price crashed 92 percent almost immediately.
Oh, my God. So I'm saying they're holding these
27 coins that they told me were worth $10 ,000.
But five minutes later. they are trading on other
exchanges for... What? $30, then $20, then eventually
less than $1. So my $10 ,000 refund is actually
worth maybe $100 by the time I can even sell
it. If you're lucky. Correct. And the BitConnect
founders walk away clean technically. They can
throw their hands up and say, hey, we refunded
everyone. We gave you the coins. It's not our
fault the market crashed afterwards. It's the
most malicious form of compliance I've ever heard
of. They wiped out the massive liability of the
system while leaving the investors holding an
empty bag. It effectively transfer all the remaining
wealth from the users to the creators in one
final. devastating stroke. The internal exchange
liquidity collapsed completely. It was over.
And that is the moment the scream from the meme
turned into a genuine cry for help from thousands
of people. Indeed. It was absolute devastation.
The source material is grim. There were suicide
hotline numbers pinned to the top of the BitConnect
subreddits. People lost homes. They lost their
college funds. They lost their entire retirement
savings. So who is pulling the strings? You don't
build a $2 .4 billion fraud by accident. Who
are the architects here? The structure was intentionally
opaque and anonymous. That's the nature of these
crypto primes. But legal investigations over
the last few years have managed to bring some
names to light. The man identified as the founder,
the original author of the code, is an Indian
national named Satish Kumbani. Satish Kumbani.
For a long time, he was a ghost. a name in a
white paper. But in February 2022, the U .S.
Department of Justice finally unsealed an indictment
against him for money laundering, wire fraud
and operating an unlicensed money transmitting
business. So has he been arrested? Is he in custody?
His whereabouts have been complicated, let's
say. The pursuit of international crypto criminals
is always difficult. But legally speaking, he
is the head of the snake. But he couldn't have
done it alone. We talked about that huge MLM
structure. You need promoters. You need faces
for the operation. Yes. And the biggest promoter
in the United States, the guy at the very top
of the pyramid here, was a man named Glen Orcaro.
Glen Orcaro. He served as the lead national promoter
from August 2017 to January 2018, right during
the peak of the mania. He created a company with
a very subtle name, Future Money LTD. Future
Money. Little on the nose, isn't it? Just a bit.
It worked, though. He used this entity to lure
investors into the BitConnect lending program.
He was the one organizing the big conferences,
making the slick promotional videos. But unlike
Kumbani, Arcaro faced the music relatively quickly.
On September 1st, 2021, he pleaded guilty to
a conspiracy to commit wire fraud. And what were
the penalties for him? They were significant.
He was ordered to pay $17 million in restitution
to about 800 identified victims. Yeah. And he
agreed to forfeit $24 million in assets. $24
million. That's a lot of money to forfeit. It
just shows you how much he personally was skimming
off the top. If one promoter has $24 million
just lying around. It gives you a sense of the
scale of the cash flow, yes. And then there's
the international connection. Dvij Darji, who
was the India region leader. He was arrested
in Delhi in August of 2018. And the sources mentioned
something really interesting about him, a potential
connection to something called black money in
India. Yes. This connects to a broader economic
event in India at the time demonetization. The
Indian government had suddenly banned certain
high value currency notes to crack down on the
shadow economy and elicit cash hordes. Right.
I remember that. It caused chaos. People were
scrambling to figure out what to do with their
stacks of untaxed cash. Exactly. And there is
a strong suspicion among Indian authorities that
Darjeet and BitConnect were involved in laundering
this black money through the crypto platform.
The pitch would have been give us your soon to
be worthless cash. We'll give you digital BitConnect
coins. It's a perfect laundromat. So it wasn't
just a simple Ponzi scheme. It was potentially
a massive money laundering operation for criminal
cash as well. That is the allegation. And remarkably,
after being arrested for BitConnect, Darjeet
was later arrested in connection with another
very similar scam called RegalCoin. You're kidding
me. He got out and just did it again. It appears
so. It speaks to the serial nature of these frauds.
Once you have the playbook, you just change the
logo, change the name of the coin, and run the
same scam all over again on a new group of victims.
That's depressing. Now, before we get to the
final legal cleanup, we have to talk about the
event. The meme. We touched on it in the intro,
but we need to go deeper because I think that
one event explains the psychology of the scam
better than any financial chart ever could. The
first and as it turns out, the only BitConnect
annual ceremony. Pattaya, Thailand, October 28th,
2017. Right at the peak of the hype. Just a few
short months before the entire thing imploded.
They rent out this massive flashy venue. It's
pure spectacle. There are lasers, dancers, awards
ceremonies where they give out these giant oversized
checks to the top promoters. It's designed to
look like a celebration of success. And then
Carlos Matos takes the stage. Carlos Matos from
New York City. He's an investor. It's important
to note he's not a founder. He's not one of the
architects of the scam. He's a user and he is.
Well, exuberant is the word you used. That is
a very polite word for what we witnessed. He
gives this testimonial that is just pure, unadulterated,
raw energy. I am so excited. He's talking about
how his wife didn't believe in him, how she kept
telling him it was a scam. No, no, no, he says.
And now he's making so much money. And then comes
the scream, BitConnect's CCT. He screams it in
different registers. He growls it. He shrieks
it. It's this primal release of financial validation.
He feels like he's proven everyone wrong. I've
watched that video so many times. And looking
back now, knowing everything we know, it's genuinely
eerie. It doesn't look like a financial conference.
It feels like a religious revival meeting. It
feels like a cult. It absolutely does. And that
is a key insight. The community aspect of these
schemes is incredibly powerful. When you are
in that room in Thailand, surrounded by thousands
of other people who are all getting rich, all
screaming the name of the company. Doubt just
evaporates. It suppresses your critical thinking.
Your brain says, if all these people are happy
and successful, surely I'm the one who's wrong
to be suspicious. Exactly. It's social proof,
weaponized. The meme itself, you mentioned, it
was profiled by John Oliver, by Keegan -Michael
Key. It became a global joke. As an expert looking
at market psychology, that video serves as a
historical document of irrational exuberance.
It is what a financial bubble looks like in human
form. It's the visual representation of the absolute
peak right before the fall. Yes. When you see
that level of blind, screaming fanaticism for
a financial product, when people are chanting
the name of an asset class like it's a deity,
run. Run fast. Run very, very fast in the other
direction. So the party ended. The music stopped.
The scream faded. And then came the lawyers.
This brings us to Section 7, the legal fallout.
The bill comes due. We mentioned that $2 .4 billion
figure from the SEC. Yes. In September 2021,
the SEC officially sued BitConnect, Kumani, and
Arcaro. They alleged that they defrauded U .S.
investors of a total of $2 .4 billion. It's one
of the largest crypto -related frauds they've
ever prosecuted. It's just a staggering number.
And the civil actions, the class action lawsuits
from investors, they started... Pretty much immediately
after the collapse, right? Right. January 31st,
2018. A temporary restraining order was issued
to freeze their assets. But here's the problem.
Freezing assets implies that you can actually
find the assets. And let me guess. The money
was long gone. Well, not just that. It was a
structural problem. BitConnect as a corporate
entity never actually existed. Wait, what do
you mean? It was a decentralized structure by
design. There wasn't a BitConnect Inc. headquarters
in a skyscraper in New York that the FBI could
raid. There were no filing cabinets full of documents.
There was no central server farm. It was just
a distributed network of code and anonymous crypto
wallets scattered all over the world. This made
locating and seizing assets incredibly difficult.
The court ordered the disclosure of wallet addresses
and the identities of the people who controlled
them. But you are literally chasing ghosts on
the blockchain. Funds can be tumbled, mixed and
moved across international borders in seconds
with no paper trail. This is the dark side of
decentralization that people don't often talk
about. It can be used as a shield for crime.
Precisely. It turns the legal process into a
very slow and expensive game of whack -a -mole.
However, the legal system is persistent. We saw
the criminal actions against Arcaro result in
a conviction. And more recently, on January 12th,
2023, a federal court in San Diego ordered a
restitution distribution. So victims are actually
getting some money back. Some victims, yes. About
800 of them qualified for this specific distribution
of funds seized from Glenn Arcaro. The total
amount being distributed. $17 million. $17 million.
Correct. Out of an estimated $2 .4 billion in
losses. It is less than 1%. It is a drop in the
ocean. That is just heartbreaking. It is. And
that is the ultimate tragedy of these schemes.
Once the money enters the crypto ecosystem and
gets properly washed and distributed, it is incredibly,
almost impossibly hard to get back. Most of that
$2 .4 billion is likely gone, forever spent on
luxury cars and mansions, hitting in untraceable
cold storage wallets, or simply lost to the volatility
of the crypto market itself. So let's zoom out.
We've gone through this whole sordid tale. We've
looked at the tech, the scam, the people, the
meme. If we step back and look at the whole picture,
what is the big takeaway here? The summary is
painfully clear. BitConnect was a classic, old
fashioned Ponzi scheme dressed up in modern,
complicated blockchain terminology. It used the
complexity and the hype around crypto words like
blockchain, trading bots, volatility software,
proof of stake to hide a simple mechanism that
Charles Ponzi would have recognized in 1920.
It promised 1 % daily returns, which we've established
is mathematically impossible and unsustainable.
And it collapsed the very moment any kind of
real regulatory scrutiny appeared. The magical
bot couldn't survive a cease and desist letter
because the bot never existed in the first place.
You know, it's easy to look back now with the
benefit of hindsight and say, how could people
be so stupid? But I think that's unfair. Yeah.
That misses the point of how seductive these
things are. It is extremely unfair. These schemes
are designed to bypass our logic centers. They
don't target our intellect. They target our hope.
They target our greed. And they create a powerful
community like that event in Thailand that reinforces.
the lie. They make you feel like you are part
of a special club, a revolution. I keep thinking
about Carlos Matos on that stage. He wasn't one
of the core scammers. He was a victim who became
a promoter because he truly believed it. He was
a true believer and there were thousands like
him. He represents thousands of others who weren't
on a stage but felt the exact same way. They
desperately wanted to believe there was a shortcut
to financial freedom and BitConnect sold them
that dream. So for you, for our listeners, the
ultimate lesson is what? The lesson is absolute
radical skepticism. If someone, anyone, promises
you guaranteed returns, especially anything approaching
1 % a day, it is a scam. Full stop. There is
no software, no AI, no quantum computer that
can guarantee profit in a volatile market. The
fundamental principle is this. If it sounds too
good to be true, it is. Every single time. The
technology changes, but the scam remains the
same. Exactly. Today, it's a crypto trading bot.
Tomorrow, it might be an AI -driven real estate
fund. The day after that, it might be asteroid
mining rights. The pitch changes, but the underlying
Ponzi math does not. That's a sobering thought.
I want to leave us with one final, slightly provocative
thought to chew on. We mentioned Divya Starji,
the guy from India, getting arrested for another
scam called RegalCoin right after BitConnect
blew up. Yes. It's like a hydra, isn't it? You
cut off one head and two more grow back in its
place. That is the unfortunate reality of the
space. BitConnect is gone. The scream is now
a joke on TikTok. But somewhere, right now, on
a Telegram channel or a Discord server, there
is a new version of this brewing. A new magic
bot. A new revolutionary platform. And people
are putting their life savings into it right
now as we speak. Exactly. So the question that
kind of keeps me up at night is this. What is
the next BitConnect that is operating right now
that we just haven't identified yet? And it should
keep all of us up. Vigilance is the only real
defense. Well, on that cheerful note, I think
we're going to wrap up this deep dive. Thank
you for listening and thanks for unpacking this
absolute madness with me. Always a pleasure,
even when the topic is this dark. Keep your wallet
safe, everyone. We'll see you next time.