DOJ Sues Indian Founder of BitConnect Over $2.4 Billion Crypto Ponzi Scheme

The founder of notorious crypto exchange BitConnect, Satish Kumbhani, has been charged with allegedly misleading investors worldwide and defrauding $2.4 billion.

According to to the Department of Justice (DOJ), a San Diego-based federal grand jury has specifically accused Kumbhani of orchestrating the alleged Ponzi scheme through BitConnect’s “Lending Program”:

“BitConnect worked as a Ponzi scheme by paying previous BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators have obtained about $2.4 billion from investors.

BitConnect (BCC) price history. Source: CoinMarketCap

In 2017, amid the hype, BitConnect (BCC) hit an all-time high of $463.31 in trading price, reaching a peak market cap of $3.4 billion, according to the DOJ. However, as can be seen from the chart above, prices quickly collapsed within a few months, resulting in huge losses for investors.

Kumbhani, who lives in Gujarat, India, is said to have promised investors “substantial profits and guaranteed returns” under BitConnect’s “Lending Program”. The indictment alleges that Kumbhani used new investors’ money to partially repay the old investors until the program was abruptly discontinued — using a textbook Ponzi scheme.

The DOJ further stated that Kumbhani and his co-conspirators distorted market demand for BCC through market manipulation. The resulting investments were reportedly hidden and transferred through “BitConnect’s cluster of cryptocurrency wallets and several internationally-based cryptocurrency exchanges.”

In support of the DOJ’s allegations, former BitConnect promoter Glenn Arcaro pleaded guilty to fraud in September 2021 regarding his role in the now-defunct crypto exchange and lending platform.

The indictment also alleges that Kumbhani evaded US regulations by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required under the Bank Secrecy Act.

All in all, “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit the price manipulation of goods, operating an unlicensed money transferring company and conspiracy to commit international money laundering,” the DOJ press release said.

The case is currently under investigation by the FBI Cleveland Field Office and IRS Criminal Investigation (CI). If convicted on all counts, Kumbhani will face a maximum prison sentence of 70 years. In addition, the DOJ recommends that all BitConnect investors register as potential victims.

Related: SafeMoon Pump-and-Dump Lawsuit Targets Jake Paul, Soulja Boy, and Others

On February 20, a new class-action lawsuit demanded a jury trial against popular celebrities and influencers for their alleged participation in a classic pump-and-dump scheme involving SafeMoon tokens.

As Coin-Crypto reported, the lawsuit alleged that SafeMoon and its subsidiaries were mimicking real Ponzi schemes by deceiving investors into buying SafeMoon tokens under the pretense of unrealistic profits.

The lawsuit, filed by prosecutors Bill Merewhuader, Christopher Polite and Tim Viane, appears to represent and compensate all individuals who have purchased SafeMoon tokens since March 8, 2021 and were victims of the alleged carpet-pulling attempt.

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