Kumbhani was indicted by a federal grand jury in San Diego with running an alleged Ponzi scheme through BitConnect’s “Lending Program,” among other things.
Satish Kumbhani, the founder of the famed crypto exchange BitConnect, has been charged with defrauding investors worldwide by allegedly deceiving them and robbing them of $2.4 billion.
A federal grand jury in San Diego specifically indicted Kumbhani with directing the alleged Ponzi scheme via BitConnect’s “Lending Program,” according to the DOJ:
“BitConnect was a Ponzi scheme that paid early BitConnect investors with money from later BitConnect investors. Kumbhani and his associates were able to raise $2.4 billion in total from investors.”
During the buzz in 2017, BitConnect (BCC) hit an all-time high of $463.31 in trading price, with a market value of $3.4 billion, according to the DOJ. However, as shown in the graph above, prices plummeted in a matter of months, resulting in significant losses for investors.
Under the BitConnect’s “Lending Program,” Kumbhani, who lives in Gujarat, India, allegedly promised investors “significant income and assured returns.” According to the indictment, Kumbhani used fresh investor cash to partially repay existing investors before abruptly shutting down the programme, committing a classic Ponzi scheme.
The DOJ further claimed that Kumbhani and his accomplices manipulated the market to create bogus demand for BCC. The money was allegedly hidden and transferred through “BitConnect’s cluster of bitcoin wallets and different internationally-based cryptocurrency exchanges.”
Former BitConnect promoter Glenn Arcaro pled guilty to fraud charges relating to his role in the now-defunct crypto exchange and lending platform in September 2021, corroborating the DOJ’s claims.
Kumbhani allegedly violated US regulations by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required by the Bank Secrecy Act, according to the indictment.
Overall, the DOJ press release stated that “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unregistered money transmitting business, and conspiracy to engage international money laundering.”
The FBI Cleveland Field Office and IRS Criminal Investigation are presently investigating the situation (CI). If found guilty on all counts, Kumbhani faces a maximum sentence of 70 years in jail. Furthermore, the DOJ advises all BitConnect investors to register as potential victims.
A new class-action complaint filed on Feb. 20 sought a jury trial against well-known celebrities and influencers for their alleged involvement in a classic pump-and-dump operation involving SafeMoon tokens.
SafeMoon and its subsidiaries were accused of imitating real-life Ponzi schemes by deceiving investors into purchasing SafeMoon tokens under the guise of unachievable profits, according to the lawsuit.
— W◎◎F of Wall Street | CwooFA (@WoofManCapital) April 21, 2021
The action, which was written by plaintiffs Bill Merewhuader, Christopher Polite, and Tim Viane, seeks to represent and recompense all anyone who purchased SafeMoon tokens between March 8, 2021, and were victims of the alleged rug pull effort.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.