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


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

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

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

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 in response to the DOJ reached a peak market capitalization of $3.4 billion. Nevertheless, as evidenced by the graph above, the costs quickly collapsed inside a number of months inflicting large losses to buyers. 

Kumbhani, who resides in Gujarat, India, allegedly promised buyers “ to generate substantial earnings and assured returns” below the BitConnect’s “Lending Program.” The indictment alleges Kumbhani used the funds from new buyers to partially pay again the outdated buyers till abruptly shutting down this system — working a textbook Ponzi scheme.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 by way of market manipulation. The resultant investments have been allegedly hid and transferred by way of “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 responsible to fraud expenses associated to his function within the now-defunct crypto change 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 below 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 at the moment being investigated by the FBI Cleveland Area Workplace and IRS Felony Investigation (CI). If convicted of all counts, Kumbhani will likely be topic to a most whole penalty of 70 years in jail. As well as, the DOJ recommends all BitConnect buyers 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 standard celebrities and influencers for his or her alleged participation in a basic pump-and-dump scheme regarding SafeMoon tokens.

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

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