The US Department of Justice today released its indictment against Satish Kumbhani, the founder of the late cryptocurrency exchange BitConnect. According to the indictment, Kumbhani and his associates used a Ponzi scheme to defraud investors of approximately $2.4 billion. Kumbhani is currently on the run.
The government charges him with conspiracy to commit wire fraud, conspiracy to manipulate commodity prices, operating a money transmission business without a license, and conspiracy to commit international money laundering. The indictment establishes that BitConnect was operated as a classic Ponzi scheme. Previous BitConnect investors were paid with the newer investors’ money.
Investigating authorities also accuse Kumbhani of abruptly closing the loan program after about a year of operation. Kumbhani then encouraged his acquaintances to artificially inflate the BitConnect token (BCC) price. This gave the false impression of a legitimate demand for BCC in the market. Kumbhani and his entourage also hid what happened to the funds received from investors.
The former BitConnect supporter has confessed
According to the indictment, he scattered them across wallets and various internationally based crypto exchanges through the BitConnect group. If he is found guilty on all counts, Kumbhani faces a maximum sentence of 70 years in prison. One of BitConnect’s proponents at the time was Glenn Arcaro, who lives in Los Angeles. In September 2021, he pleaded guilty in federal court to involvement in illegal dealings. Not only investors from the United States, but also those from abroad fell for the scam.
District Attorney for the Southern District of California Randy Grossman:
The US Attorney’s Office and our law enforcement partners are committed to bringing justice to victims of cryptocurrency fraud.
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