The founder of the infamous BitConnect cryptocurrency exchange, Satish Kumbhani, has been accused of misleading investors around the world and defrauding them of $2.4 billion in the process.
According According to the Department of Justice (DOJ), a federal grand jury based in San Diego specifically indicted Kumbhani for orchestrating the alleged Ponzi scheme through the BitConnect “Loan Program”:
“BitConnect operated as a Ponzi scheme paying early BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators made approximately $2.4 billion from investors.”
Back in 2017, amidst the hype, BitConnect (BCC) posted an all-time high of $463.31 in trading price, which according to the DOJ reached a peak market capitalization of $3.4 billion. However, as the chart above demonstrates, prices soon crashed within a few months, causing investors massive losses.
Kumbhani, who resides in Gujarat, India, allegedly promised investors to “generate substantial profits and guaranteed returns” under BitConnect’s “Loan Program”. The indictment alleges that Kumbhani used funds from new investors to partially reimburse old investors until he abruptly shut down the program, operating a textbook Ponzi scheme.
The Department of Justice further stated that Kumbhani and his accomplices faked the market demand for BCC through market manipulation. The resulting investments were allegedly hidden and transferred through the “BitConnect cryptocurrency wallet group and several foreign-based cryptocurrency exchanges.”
https://www.youtube.com/watch?v=lCcwn6bGUtU
Supporting the DOJ’s accusations, in September 2021, former BitConnect promoter, Glenn Arcaro, pleaded guilty to fraud charges related to his role in the now defunct cryptocurrency exchange and lending platform.
The accusation it also alleges that Kumbhani evaded US regulations by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required by the Bank Secrecy Act.
Total, Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operating an unlicensed money transmission business, and conspiracy to commit international money laundering.says the statement from the Department of Justice.
The case is currently being investigated by the FBI Cleveland Field Office and the IRS Bureau of Criminal Investigation (CI).. If he is found guilty on all counts, Kumbhani will be subject to a total maximum sentence of 70 years in prison.. What’s more, the DOJ recommends that all BitConnect investors register as potential victims.
On Feb. 20, a new class action demanded a jury trial against popular celebrities and influencers for their alleged involvement in a classic pump-and-dump scheme involving SafeMoon tokens.
As Cointelegraph reported, The lawsuit alleged that SafeMoon and its subsidiaries mimicked real-life Ponzi schemes by tricking investors into buying SafeMoon tokens under the guise of unrealistic profits.
Choose your fighter #SafeMoon #BitConnectttttt pic.twitter.com/b1GMnMHxuF
— W◎◎F of Wall Street | CwooFA (@WoofManCapital) April 21, 2021
Drafted by plaintiffs Bill Merewhuader, Christopher Polite, and Tim Viane, the lawsuit seeks to represent and compensate all individuals who purchased SafeMoon tokens since March 8, 2021 and who were victims of the alleged rug pull attempt.
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