Satish Kumbhani, from India, receives charges with ten counts of cryptocurrency fraud. The main person in Bitconnect got tried while he was still at large.
The US Department of Justice charged BitConnect founder Satish Kumbhani with misappropriating $2 billion through a digital currency Ponzi structure that amassed many victims behind the mask of a lending protocol.
According to the court file, 36-year-old Kumbhani commanded a network of promoters to boost the price of BitConnect Coin, committed wire fraud, and led a financial entity without the proper licenses. He received charges with ten counts in total, including international money laundering. If the courts find him guilty on all counts, he will struggle with a maximum sentence registered in 70 years in prison.
According to the Justice Department, Kumbhani has Indian Nationality and remains a fugitive. In September of 2021, he received a series of accusations from the Securities and Exchange Commission, together with one of the leading promoters.
Behind the mask of loan program,” Kumbhani and his promoters claimed that they had an alleged proprietary technology with which they operated the BitConnect Trading Bot and Volatility Software platforms. They could generate substantial profits, guaranteeing returns by using investors’ money to trade the cryptocurrency market’s volatility.
As mentioned in the accusation, BitConnect operated as a Ponzi scheme paying its older investors with new ones. In total, Kumbhani and his accomplices seized more than $2 billion from his victims.
A Trap for Bitcoiners
To join BitConnect, investors had to use bitcoin to purchase BCC on the Bitconnect Exchange. Therefore, this network served as a trap to catch digital currencies. In exchange, the victims received a token with the promise that they could make a profit, as the court document highlights.
The platform got surrounded by heavy publicity on social media in February 2016. By December 2017, its coin was trading for $463, but its price subsequently plummeted, leaving victims trapped in a scam. Bitconnect afterward came to an end when in 2018, the SEC ordered it to cease operations.
However, US authorities announced last year that victims would receive compensation with the money confiscated from BitConnect’s leading promoter, Glenn Arcaro because their cryptocurrency holdings got housed in digital wallets handled by the US government for a few months.
World Justice Regarding BitConnect
After creating its cryptocurrency, the company got repeatedly accused of fraud. In 2018, US regulators put their eyes on the scheme, and the company ended up closing. That year, the token got banned from the last supported exchange due to many accusations against BitConnect.
Since then, dozens of accusations against the company have emerged in countries like the United States of America, the United Kingdom, Singapore, Australia, and India; the FBI even developed a program to detect victims of BitConnect.
By: Jenson Nuñez
