The founder of BitConnect is being sued for illegally raising cash and scamming over $2 billion in American investors.
Following his conviction by the US Department of Justice in a $2.4 billion Ponzi fraud, BitConnect founder Satish Kumbhani has gone missing.
The Securities and Exchange Commission stated in a court statement on Monday that Kumbhani’s whereabouts are unknown. Kumbhani’s last known whereabouts, according to the SEC, was in his home India, but he has been missing since the promoter of his BitConnect Ponzi scheme was charged by the SEC with defrauding American investors of over $2 billion.
The SEC stated in its statement that the convicted founder has most likely fled to another country, and that “Kumbhani’s location remains unknown, and the Commission is unable to determine when, if at all, its efforts to locate him will be successful.” Wire fraud, operating an unregistered money transmitting business, and three conspiracy have been filed against the founder: wire fraud, commodity price manipulation, and international money laundering.
The BitConnect saga stretches back to the ICO era, and it was one of the most well publicised and discussed initiatives at the time. By mid-2017, the crypto project had gathered billions of dollars from global investors, making it a global sensation. The project claimed a loan scheme based on proprietary “trading bots” and “volatility software” that would reward investors with a 10% return on their BCC token investments.
The Department of Justice charged Kumbhani with running a Ponzi scheme through BitConnect’s loan business, which managed to swindle $2.4 billion from investors. At the height of the market frenzy in December 2017, Bitconnect’s native token BCC hit an all-time high trading price of $463.31, giving it a market valuation of $3.4 billion.
By January 2018, the project’s founders had yanked the rug out from under it, plunging the token price to near nothing and caused enormous losses to investors.
Kumbhani was also charged by the DOJ of inflating BCC’s market demand in order to entice additional unwary investors. The project, like many others during the ICO frenzy, turned out to be a giant pyramid scheme, with the designers using early cash to pay off old investors and then fleeing after earning billions thanks to the hoopla and ICO mania. Several project proponents have already been convicted and are facing jail time in Australia and the United States.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.