Home News DOJ indicts BitConnect Indian founder for $2.4B crypto Ponzi scheme

DOJ indicts BitConnect Indian founder for $2.4B crypto Ponzi scheme


Satish Kumbhani, the founder of the famed crypto exchange BitConnect, has been charged with defrauding investors worldwide. By allegedly deceiving them and robbing them of $2.4 billion.

In fact, a federal grand jury in San Diego specifically indicted Kumbhani with directing the alleged Ponzi scheme via BitConnect’s “Lending Program,” according to the DOJ:

“BitConnect was a Ponzi scheme that paid earlier BitConnect investors with funds from later BitConnect investors. Kumbhani and his accomplices raised a total of $2.4 billion from investors.”

BitConnect (BCC) price history. Source: CoinMarketCap

BitConnect’s “Lending Program

During the buzz in 2017, BitConnect (BCC) hit an all-time high of $463.31 in trading price. With a market value of $3.4 billion, according to the DOJ. However, as shown in the graph above, prices plummeted in a matter of months, resulting in significant losses for investors.

Additionally, under the BitConnect’s “Lending Program,” Kumbhani, who lives in Gujarat, India, allegedly promised investors “significant income and assured returns”. According to the indictment, Kumbhani used fresh investor cash to partially repay existing investors. Before abruptly shutting down the programme, committing a classic Ponzi scheme.

The DOJ further claimed that Kumbhani and his accomplices manipulated the market to create bogus demand for BCC. The money allegedly hidden and transferred through “BitConnect’s cluster of bitcoin wallets and different internationally-based cryptocurrency exchanges.”

Former BitConnect promoter Glenn Arcaro pled guilty to fraud charges relating to his role in the now-defunct crypto exchange and loan platform in September 2021, corroborating the DOJ’s findings.

Kumbhani faces charges of conspiracy to commit wire fraud

Kumbhani also accused of violating US regulations by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required by the Bank Secrecy Act.

Overall, the DOJ press release stated, “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unregistered money transmitting business, and conspiracy to engage international money laundering.”

The FBI Cleveland Field Office and IRS Criminal Investigation are presently looking into the situation (CI). Kumbhani faces a potential sentence of 70 years in jail if convicted on all counts. Furthermore, the DOJ advises that all BitConnect investors register as prospective victims.

A new class-action complaint filed on Feb. 20 sought a jury trial for popular celebrities and influencers accused of participating in a classic pump-and-dump scheme involving SafeMoon tokens.

According to the lawsuit, SafeMoon and its subsidiaries imitated real-life Ponzi schemes by deceiving investors into buying SafeMoon tokens under the guise of unachievable profits.

The action, which was written by plaintiffs Bill Merewhuader, Christopher Polite, and Tim Viane, seeks to represent and pay any people who purchased SafeMoon tokens after March 8, 2021, and were victims of the alleged rug pull effort.

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