Satish Kumbhani, Indian founder of BitConnect, indicted by US in $2.4 billion crypto fraud case

moneycontrol.com:

The founder of cryptocurrency investment platform BitConnect, an Indian national, has been indicted on charges of orchestrating a global Ponzi scheme worth USD 2.4 billion, federal prosecutors said.

According to court documents, Satish Kumbhani (36) of Hemal in Gujarat misled investors about BitConnect’s “Lending Program.” BitConnect reached a peak market capitalisation of USD 3.4 billion, the Department of Justice said.

“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than USD 2 billion,” U.S. Attorney Randy Grossman for the Southern District of California said on Friday.

Kumbhani is charged with conspiracy to commit wire fraud and 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.

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

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

The indictment, which was returned by a federal grand jury in San Diego, alleges that after operating for approximately one year, Kumbhani abruptly shut down the “Lending Program”.