BitConnect founder Satish Kumbhani indicted by US in $2.4 billion Ponzi scam

Cryptocurrency investment platform Bitconnect’s Indian
founder has been charged for orchestrating a global Ponzi scheme worth US $2.4
billion, said federal prosecutors.

Satish Kumbhai, 36, from Hemal in Gujarat misguided
investors about BitConnect’s “Lending Program,” as per the court documents.
According to a PTI report, BitConnect reached its highest market capitalization
of US $3.4 billion, said the Department of Justice.

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This indictment alleges a massive cryptocurrency scheme
that defrauded investors of more than USD 2 billion, said US Attorney Randy
Grossman for the Southern District of California.

Kumbhani is charged with conspiracy to commit
international money laundering, wire fraud and price manipulation and operation
of an unlicensed money transmitter business. If he is convicted of all counts,
he will face a maximum total punishment of 70 years in prison.

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Kumbhani along with his co-conspirators touted BitConnect’s
purported proprietary technology “BitConnect Trading Bot” and “Volatility
Software”, as being able to generate substantial profits, under the “Lending
Program.” They guaranteed returns by using investors’ money to trade on the
volatility of cryptocurrency exchange markets.

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BitConnect operated as a Ponzi scheme by paying earlier
BitConnect investors with money from later investors, as alleged in the
indictment. Kumbhani and his co-conspirators raised approximately USD 2.4
billion from investors.

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Kumbhani abruptly shut down the “Lending
Program” after operating for approximately one year, according to the
indictment returned by a federal grand jury in San Diego.

To create the false appearance of genuine market demand
for BitConnect Coin (BCC), he directed his promoter network to manipulate and
prop up its price fraudulently.

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The US Department of Justice alleged that Kumbhani and
his co-conspirators concealed the location and control of the fraud proceeds
obtained from investors by commingling, cycling, and exchanging the funds
through BitConnect’s cluster of cryptocurrency wallets and various
internationally-based cryptocurrency exchanges.

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Kumbhani further violated US regulations governing the
financial industry, including those enforced by the Financial Crimes
Enforcement Network (FinCEN). For instance, although BitConnect operated a
money transmitting business through its digital currency exchange, BitConnect
never registered with FinCEN, as mandatory under the Bank Secrecy Act.