DOJ indicts BitConnect’s Indian founder for $2.4B crypto Ponzi blueprint

Posted by

The founder of the unsuitable crypto alternate BitConnect, Satish Kumbhani, has been charged for allegedly deceptive merchants globally and defrauding them of $2.4 billion within the system.

In step with the Department of Justice (DOJ), a San Diego-based fully federal extensive jury particularly charged Kumbhani for orchestrating the alleged Ponzi blueprint through BitConnect’s “Lending Program”:

“BitConnect operated as a Ponzi blueprint by paying earlier BitConnect merchants with money from later merchants. In total, Kumbhani and his co-conspirators received approximately $2.4 billion from merchants.”

BitConnect (BCC) mark history. Source: CoinMarketCap

Encourage in 2017 amid the hype, BitConnect (BCC) recorded an all-time excessive of $463.31 in buying and selling mark, which in response to the DOJ reached a first-rate market capitalization of $3.4 billion. On the opposite hand, as evidenced by the graph above, the costs quickly collapsed within a few months inflicting broad losses to merchants. 

Kumbhani, who resides in Gujarat, India, allegedly promised merchants “ to generate tall profits and guaranteed returns” under the BitConnect’s “Lending Program.” The indictment alleges Kumbhani ancient the funds from novel merchants to in part pay wait on the ancient merchants till shutting down this technique — running a textbook Ponzi blueprint.

The DOJ extra acknowledged that Kumbhani and his co-conspirators faked market demand for BCC thru market manipulation. The resultant investments were allegedly concealed and transferred through “BitConnect’s cluster of cryptocurrency wallets and varied internationally-based fully cryptocurrency exchanges.”

Supporting DOJ’s allegations, wait on in Sept. 2021, ancient BitConnect promoter Glenn Arcaro pled guilty to fraud charges related to his role within the now-defunct crypto alternate and lending platform.

The indictment moreover alleges that Kumbhani averted U.S. regulations by failing to register with the Monetary 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 commodity mark manipulation, operation of an unlicensed money transmitting substitute, and conspiracy to commit international money laundering,” said the DOJ press delivery.

The case is for the time being being investigated by the FBI Cleveland Discipline Residing of job and IRS Felony Investigation (CI). If convicted of all counts, Kumbhani will be subject to a maximum total penalty of 70 years in penal advanced. Besides, the DOJ recommends all BitConnect merchants register themselves as likely victims.

Associated: SafeMoon pump-and-dump lawsuit targets Jake Paul, Soulja Boy and others

On Feb. 20, a brand novel class-circulation lawsuit demanded a jury trial in opposition to in style celebrities and influencers for their alleged participation in a classic pump-and-dump blueprint concerning SafeMoon tokens.

As Cointelegraph reported, the lawsuit alleged that SafeMoon and its subsidiaries mimicked precise-lifestyles Ponzi schemes by deceptive merchants to plan shut SafeMoon tokens under the pretext of unrealistic profits.

Grab your fighter #SafeMoon #BitConnectttttt

— W◎◎F of Wall Aspect road | CwooFA (@WoofManCapital) April 21, 2021

Drafted by plaintiffs Invoice Merewhuader, Christopher Polite and Tim Viane, the lawsuit appears to be like to be to symbolize and compensate all other folks who equipped SafeMoon tokens since March 8, 2021, and were victims of the alleged rug pull try.