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BitConnect founder indicted by US grand Jury

by on28 February 2022

Accused of running a ponzi scheme

BitConnect founder Satish Kumbhani was indicted by a US grand jury on charges he orchestrated a global Ponzi scheme that raised $2.4 billion from investors in a fraudulent cryptocurrency investment platform.

Kumbhani, 36, was charged in San Diego with misleading investors about BitConnect's purported propriety technology.

BitConnect used money from new investors to pay earlier and also operated as an unlicensed money transmitting business, the US said.

BitConnect's open-source, decentralised cryptocurrency, called BCC, was popular and uses Bitcoin for the purchase. Investors would then "lend" their BCC tokens to Bitconnect, which would purportedly invest the proceeds using proprietary technology known as the Trading Bot and Volatility Software.

The technology was supposedly designed to trade automatically, and profitably, by buying and selling on the volatility of Bitcoin, according to the indictment.

However the technology was a bit of a mystery and Kumbhani, when asked about it, refused because it was “too hard to explain” and “could not be disclosed for privacy reasons.

Prosecutors say the investments weren't being traded as promised but were instead used to pay out earlier investors, typical of a pyramid scheme.

The funds would also be used to pay BitConnect's army of promoters, who would market the investment opportunity on social media and at live events.

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


Last modified on 28 February 2022
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