BitConnect Founder Indicted For Orchestrating a Global Ponzi Scheme

Unlike the BCC token that died several years ago, the case of Bitconnect – the cryptocurrency project that gave rise to the aforementioned cryptocurrency – is still far from over.

This Friday, the U.S. Department of Justice announced that one of BitConnect’s founders was formally indicted on fraud charges associated with the most famous Ponzi scheme in the world of cryptocurrencies.

The Drama Isn’t Over

In an official press release, the Justice Department said that Satish Kumbhani, 36, of Hemal, India; had been charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering.

All the charges are associated with the operation of Bitconnect. This service was sold as a lending program that ultimately proved to be a pyramid business of global dimensions, ranking 20th in the list of cryptocurrencies with the most market capitalization.

As explained by the Justice Department, Kumbhani defrauded an undetermined number of investors, netting nearly $2.4 billion in ill-gotten funds.

Kumbhani created a scheme in which he offered a trading bot service and volatility software, promising that those who used Bitconnect would make substantial profits in crypto. The reality was that customers made money proportional to the people they managed to get involved in the business and were paid with money coming in from new users – which was characteristic of a Ponzi scheme.

Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office said in official statements that the Bitconnect case was indicative of the scope of operations of fraudsters entering the world of cryptocurrencies, looking for an opportunity to evade the law:

“Today’s indictment reiterates the FBI’s commitment to identifying and addressing bad actors defrauding investors and sullying the ability of legitimate entrepreneurs to innovate within the emerging cryptocurrency space. Dressing up a tried and true fraud scheme with a new twist and basing it overseas will not deter the resolve and dedication of the FBI to meticulously investigate and bring such fraudsters to justice.”

The SEC Also Has a History With Bitconnect

As Cryptopotato previously reported, U.S. authorities have been actively investigating the case, hunting down everyone involved and seeking to seize as much money as possible. In May 2021, The United States Securities and Exchange Commission (SEC) The United States Securities and Exchange Commission (SEC) filed a lawsuit against five individuals associated with BitConnect. Satish Kumbhani was not on the list.

Shortly thereafter, the SEC reached a settlement with three of them, obtaining more than $12 million in BTC and fiat currency in penalties.

And late last year, the SEC obtained a judgment against Glenn Arcaro and his company Future Money for violations of the Securities Act and the Exchange Act.