DOJ indicts BitConnect’s Indian founder for $2.4B crypto Ponzi scheme


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The founding father of the notorious crypto alternate BitConnect, Satish Kumbhani, has been charged for allegedly deceptive traders globally and defrauding them of $2.4 billion within the course of.

According to the Division of Justice (DOJ), a San Diego-based federal grand jury particularly charged Kumbhani for orchestrating the alleged Ponzi scheme through BitConnect’s “Lending Program”:

“BitConnect operated as a Ponzi scheme by paying earlier BitConnect traders with cash from later traders. In whole, Kumbhani and his co-conspirators obtained roughly $2.4 billion from traders.”

BitConnect (BCC) value historical past. Supply: CoinMarketCap

Again in 2017 amid the hype, BitConnect (BCC) recorded an all-time excessive of $463.31 in buying and selling value, which based on the DOJ reached a peak market capitalization of $3.4 billion. Nonetheless, as evidenced by the graph above, the costs quickly collapsed inside a number of months inflicting large losses to traders. 

Kumbhani, who resides in Gujarat, India, allegedly promised traders “ to generate substantial income and assured returns” beneath the BitConnect’s “Lending Program.” The indictment alleges Kumbhani used the funds from new traders to partially pay again the previous traders till abruptly shutting down this system — working a textbook Ponzi scheme.

The DOJ additional acknowledged that Kumbhani and his co-conspirators faked market demand for BCC via market manipulation. The resultant investments had been allegedly hid and transferred through “BitConnect’s cluster of cryptocurrency wallets and varied internationally-based cryptocurrency exchanges.”

Supporting DOJ’s allegations, again in Sept. 2021, former BitConnect promoter Glenn Arcaro pled guilty to fraud charges associated to his position within the now-defunct crypto alternate and lending platform.

The indictment additionally alleges that Kumbhani evaded U.S. laws by failing to register with the Monetary Crimes Enforcement Community (FinCEN), as required beneath the Financial institution Secrecy Act.

All in all, “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity value manipulation, operation of an unlicensed cash transmitting enterprise, and conspiracy to commit worldwide cash laundering,” mentioned the DOJ press launch.

The case is presently being investigated by the FBI Cleveland Subject Workplace and IRS Legal Investigation (CI). If convicted of all counts, Kumbhani can be topic to a most whole penalty of 70 years in jail. As well as, the DOJ recommends all BitConnect traders register themselves as potential victims.

Associated: SafeMoon pump-and-dump lawsuit targets Jake Paul, Soulja Boy and others

On Feb. 20, a brand new class-action lawsuit demanded a jury trial in opposition to common celebrities and influencers for his or her alleged participation in a basic pump-and-dump scheme referring to SafeMoon tokens.

As Cointelegraph reported, the lawsuit alleged that SafeMoon and its subsidiaries mimicked real-life Ponzi schemes by deceptive traders to buy SafeMoon tokens beneath the pretext of unrealistic income.

Drafted by plaintiffs Invoice Merewhuader, Christopher Well mannered and Tim Viane, the lawsuit seems to be to signify and compensate all people who purchased SafeMoon tokens since March 8, 2021, and had been victims of the alleged rug pull try.