A San Diego jury has charged BitConnect founder Satish Kumbhani for allegedly running a global cryptocurrency Ponzi scheme that defrauded investors of $2.4 billion. Kumbhani is still on the loose. The 36-year-old is accused of conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operating an unregistered money transmitting business, and conspiracy to engage international money laundering, according to the Justice Department. If convicted of all charges, he may face a sentence of up to 70 years in jail.
BitConnect was a deceptive cryptocurrency investment platform that peaked at $3.4 billion in market capitalization, according to the DOJ. Kumbhani persuaded investors to contribute to the company’s lending programme, which he claimed involved proprietary technology called “BitConnect Trading Bot” and “Volatility Software.” Kumbhani falsely claimed that by using investor funds to trade cryptocurrency based on market volatility, he could guarantee profits. Kumbhani shut down the Lending Program after a year, but he figured out a technique to manipulate the price of BitConnect Coin (BCC) to make it appear like it was still successful. BitConnect Coin reached a high of $463.31 at one point.
BitConnect ended up essentially compensating the early investors with funds obtained from subsequent investors. BitConnect shut down in 2018, citing negative press, distributed denial-of-service (DDoS) assaults, and regulatory inquiries as the primary causes. Due to the lending site’s refusal to register, US regulators sent cease-and-desist letters, which BitConnect’s operators claimed “created an obstacle for the legal continuance of the business.” ed must continue to be successful BitConnect Coin reached a high of $463.31 at one point. The value of existing investments was wiped entirely when BCC fell. Kumbhani and a few of his accomplices then pulled off an exit fraud, making off with $14.5 million. The case is being investigated by both the IRS and the FBI.
Glenn Arcaro, a Los Angeles resident and one of the company’s directors, pled guilty to conspiracy to commit wire fraud in September, according to the DOJ. Arcaro takes a percentage of every investment made through BitConnect’s lending programmes as a director. He pocketed up to 15% of each trade and amassed a fortune of over $24 million.
The Department of Justice announced in November that it planned to sell $56 million in cryptocurrencies confiscated from Arcaro. Trevon Brown (also known as Trevon James), Craig Grant, Ryan Maasen, and Michael “Michael Crypto” Noble were among five suspected members of the BitConnect promotion pool who were charged by the SEC in June.
According to the SEC, the five advertised and sold assets through the BitConnect loan scheme in 2017 and 2018, which promised investors returns of up to 40%. YouTube content, social media, and “testimonials” were used for marketing. The promoters received commissions ranging from $475,000 to $1.3 million.
Joshua Jeppesen, a US citizen, was also accused as an alleged intermediary between BitConnect and the platform’s sponsors, allegedly earning $2.6 million in the process. Last year, the Australian Securities and Investments Commission charged John Louis Anthony Bigatton, a BitConnect promoter from Australia (ASIC). Another core promoter, Divyesh Darji, was apprehended by the Gujarat Criminal Investigation Department (CID) after arriving in Dubai from Ahmedabad.
