BitConnect BCC
Status and tax treatment for holders of a dead token. Facts only, sourced below.
BitConnect ran a lending program built on its own coin, BCC. Its top US promoter pleaded guilty in 2021, was sentenced in 2022, and was ordered in 2023 to pay restitution to victims. Its founder was indicted in 2022, and the DOJ said in January 2023 that he remained a fugitive; those charges and the SEC’s claims against BitConnect are allegations. For a US filer the case creates no loss by itself. A loss needs a closed transaction, and a sale is the route the record supports.
What the record shows
BitConnect’s top US promoter pleaded guilty on September 1, 2021 to conspiracy to commit wire fraud, and the court accepted the plea on September 17, 2021 [1] [2]. He admitted conspiring with others to fraudulently market BitConnect’s coin offering and exchange as a lucrative investment [1].
On September 16, 2022 he was sentenced to 38 months in prison [1] [3]. The court’s minute entry records that he waived an appeal [3].
The founder of BitConnect was indicted on February 25, 2022 [1] [4]. That is a charge, not a finding. The DOJ said in January 2023 that he remained a fugitive [1].
The SEC sued BitConnect, its founder, the promoter, and the promoter’s company on September 1, 2021 [5] [6]. The court entered consent judgments against the promoter and his company on December 3, 2021 [5]. A final judgment against the promoter on September 29, 2023 set disgorgement and interest at $28,209,066 and deemed it satisfied by the restitution and forfeiture orders in his criminal case [5]. The docket shows filings in 2026 and no judgment against BitConnect or its founder, so the SEC’s claims against them are allegations [5].
What the chain shows
The SEC’s complaint describes BCC as the native token of BitConnect’s own blockchain [6]. A native token has no token contract, so this entry states no contract address. No block explorer for the BitConnect blockchain could be read when this entry was checked, so no chain fact is stated here.
Claims and distributions
The deadline for restitution claims in the promoter’s criminal case was December 16, 2022 [3]. The court held the restitution hearing on January 12, 2023 [3]. That day the DOJ said he had been ordered to pay $17,646,801 in restitution to about 800 victims in more than 40 countries [1].
On November 12, 2021, before sentencing, the court ordered an interlocutory sale of cryptocurrency in his case [2]. No open claim process for BCC holders appears in the sources this entry cites.
Tax treatment
The plea does not create a loss. A loss needs a closed transaction. The IRS Chief Counsel memo on crypto that has crashed says a token that still trades on an exchange is not worthless, and a holder who still controls it has not abandoned it [7]. The memo reads a worthlessness loss for an individual as a miscellaneous itemized deduction, and the statute now allows none of those for any tax year after 2017, with no end date [9].
A sale is different. The IRS FAQ says a sale of virtual currency for real currency is a capital gain or loss, reported on Form 8949 and summarized on Schedule D [8]. This site has not checked two questions against a primary source: whether any market still takes BCC, and how a restitution payment is taxed.
What a holder can do
The recover-or-write-off table further down lists three things a holder can do with what is left. None of them is a recommendation. Each one produces a different receipt, and the IRS reads the receipt.
Key facts
- Status
- Adjudicated
- Status date
- 2021-12-03 · 2026-09-22
- Token
- BitConnect (BCC)
- Chain
- BitConnect blockchain
- Recoverability
- Partial · 2026-09-22
Recovery
- Restitution claims in the criminal case of the top US promoter: deadline 2022-12-16, now past · 2026-09-22
- Restitution of $17,646,801 ordered at the 2023-01-12 hearing in the same criminal case, for about 800 victims · 2026-09-22
Since January 1, 2025 basis is tracked wallet by wallet, and Rev. Proc. 2024-28 gave a safe harbor for sorting old basis into the wallets that held the tokens.
Source: Internal Revenue Bulletin 2024-31, carrying Rev. Proc. 2024-28, https://www.irs.gov/irb/2024-31_irb
How the loss gets booked: the worthless-token guideHow the basis gets rebuilt: the cost-basis guideEvidence
Sources for this entry are listed below.
- United States v. Arcaro, No. 3:21-cr-02542 (S.D. Cal.): guilty plea tendered September 1, 2021 and accepted September 17, 2021; sentenced September 16, 2022 to 38 months, appeal waived; restitution of $17,646,801 ordered at the restitution hearing of January 12, 2023; the written restitution and forfeiture orders are Dkt. Nos. 74 and 75 in that case, as the SEC’s final judgment of September 29, 2023 records
- SEC v. BitConnect, Kumbhani, Arcaro, and Future Money Ltd., No. 1:21-cv-07349 (S.D.N.Y.), filed September 1, 2021: consent judgments entered December 3, 2021 as to Arcaro and Future Money Ltd.; final judgment as to Arcaro entered September 29, 2023; the SEC’s claims against BitConnect and Kumbhani are allegations
- United States v. Kumbhani, No. 3:22-cr-00395 (S.D. Cal.): indictment entered February 25, 2022; the charges are allegations; a fugitive, according to the DOJ in January 2023
- [[1]] Victims of BitConnect Scheme to Receive More than $17 Million to Compensate for Losses (U.S. Attorney, Southern District of California, January 12, 2023)https://www.justice.gov/usao-sdca/pr/victims-bitconnect-scheme-receive-more-17-million-compensate-lossesaccessed 2026-09-22
- [[2]] United States v. Arcaro, No. 3:21-cr-02542 (S.D. Cal.), docket (CourtListener RECAP archive)https://www.courtlistener.com/docket/60363878/united-states-v-arcaro/accessed 2026-09-22
- [[3]] U.S. v. Glenn Arcaro, 21CR02542-TWR, victim information page (U.S. Attorney, Southern District of California, updated February 16, 2023; removed from justice.gov, read from the Internet Archive copy of February 2, 2025)https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twraccessed 2026-09-22
- [[4]] United States v. Kumbhani, No. 3:22-cr-00395 (S.D. Cal.), docket (CourtListener RECAP archive)https://www.courtlistener.com/docket/63118260/united-states-v-kumbhani/accessed 2026-09-22
- [[5]] Securities and Exchange Commission v. BitConnect, No. 1:21-cv-07349 (S.D.N.Y.), docket (CourtListener RECAP archive)https://www.courtlistener.com/docket/60331075/securities-and-exchange-commission-v-bitconnect/accessed 2026-09-22
- [[6]] Complaint, SEC v. BitConnect et al., No. 1:21-cv-07349 (S.D.N.Y., filed September 1, 2021), ECF No. 1, RECAP copyhttps://storage.courtlistener.com/recap/gov.uscourts.nysd.565927/gov.uscourts.nysd.565927.1.0.pdfaccessed 2026-09-22
- [[7]] IRS Office of Chief Counsel Memorandum 202302011, applicability of section 165 to cryptocurrency that has declined in valuehttps://www.irs.gov/pub/irs-wd/202302011.pdfaccessed 2026-09-01
- [[8]] IRS, Frequently Asked Questions on Virtual Currency Transactionshttps://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactionsaccessed 2026-09-01
- [[9]] 26 U.S.C. 67, 2-percent floor on miscellaneous itemized deductions, as in effect August 31, 2026https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section67&num=0&edition=prelimaccessed 2026-09-01
Recover or write off?
| Option | Cost | Outcome |
|---|---|---|
| A sale to any buyer who still takes BCC | Fees, if any | A closed transaction. The loss goes on Form 8949 and Schedule D. |
| Holding the coin | Nothing | No loss is booked while the holder still has the coin. |
| A worthlessness claim | Nothing today | No deduction for an individual: the statute allows no miscellaneous itemized deduction after 2017. |