The US Department of Justice has charged BitConnect’s Indian creator with operating a $2.4 billion crypto Ponzi scam.
A federal grand jury in San Diego indicted Kumbhani with running an alleged Ponzi scheme using BitConnect’s “Lending Program,” among other things.
Satish Kumbhani, the creator of the controversial cryptocurrency exchange BitConnect, has been accused of scamming investors worldwide of $2.4 billion.
During the excitement of 2017, BitConnect (BCC) achieved an all-time high of $463.31 in trading price, reaching a peak market value of $3.4 billion, according to the DOJ. However, as demonstrated by the graph above, the prices crashed within a few months, forcing investors to suffer significant losses.
Kumbhani, who lives in Gujarat, India, is accused of promising investors “significant earnings and assured returns” through BitConnect’s “Lending Program.” According to the indictment, Kumbhani utilised cash from new investors to partially repay previous investors before abruptly shutting down the programme, therefore conducting a classic Ponzi scheme.
According to the DOJ, Kumbhani and his co-conspirators fabricated market demand for BCC through market manipulation. The resulting investments are said to have been hidden and moved through “BitConnect’s cluster of bitcoin wallets and numerous internationally-based cryptocurrency exchanges.”
In support of the DOJ’s accusations, former BitConnect promoter Glenn Arcaro pled guilty to fraud charges linked to his position in the now-defunct crypto exchange and loan platform in September 2021.
In addition, the indictment claims that Kumbhani violated US rules by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required by the Bank Secrecy Act.
According to the DOJ news release, “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities price manipulation, operation of an unregistered money transmitting company, and conspiracy to engage in international money laundering.”
The FBI Cleveland Field Office and the IRS Criminal Investigation are presently investigating the situation (CI). If convicted on all counts, Kumbhani faces a possible cumulative sentence of 70 years in prison. Furthermore, the DOJ advises all BitConnect investors to register as potential victims.
On February 20, a new class-action complaint sought a jury trial against prominent celebrities and influencers for their alleged involvement in a typical pump-and-dump operation involving SafeMoon tokens.
The action, which was written by plaintiffs Bill Merewhuader, Christopher Polite, and Tim Viane, seeks to represent and pay any those who purchased SafeMoon tokens after March 8, 2021 and were victims of the alleged rug pull effort.
