The US Department of Justice announced the indictment of BitConnect founder Satish Kumbhani. Kumbhani and his accomplices collected approximately $2.4 billion from investors in their Ponzi scheme. Still, Satish remains at large.
Satish Facing Multiple Charges
The government is charging Satish with conspiracy to commit wire fraud, conspiracy to commit price commodity manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering.
The BitConnect project operated as a Ponzi scheme, meaning it paid the early investors with the money generated from new investors.
Furthermore, Kumbhani misled investors about the purpose of BitConnect. He claimed that BitConnect trading bot and volatility software could generate massive profits. The project also guaranteed returns by using investors’ money to trade on cryptocurrency exchanges.
Then, Kumbhani directed his network of marketers to manipulate the price of BitConnect’s digital currency and create a false appearance of legitimate market demand.
Kumbhani and his team also concealed the location of their earnings by commingling, cycling, and exchanging funds through multiple wallets and international crypto exchanges.
BitConnect was launched in February 2016, and by December 2017, its coin was trading at about $463.
In January 2018, Texas and North Carolina issued cease-and-desist notices to BitConnect, demanding that it stop offering services to residents. Today, BitConnect Coin is worth $0.67.