A US federal grand jury charged Satish Kumbhani with conducting a $2.4 billion bitcoin Ponzi scheme. He was accused of wire fraud, price manipulation of commodities, and running an unlicensed money transfer company. According to the US Department of Justice, Kumbhani has also been charged with conspiracy to launder money from countries outside of the United States.
Kumbhani is accused of defrauding investors using BitConnect’s cryptocurrency “loan programme,” in which he promised the company’s unique technology would generate large profits for investors by monitoring crypto exchange prices.
Kumbhani and his co-conspirators marketed the bitcoin investment platform’s “BitConnect Trading Bot” and “Volatility Software” as having the ability to generate guaranteed profits by trading on the volatility of the cryptocurrency exchange market. After a year, the BitConnect creator ended the loan business, but managed to manipulate the price of BitConnect Coin (BCC) such that it seemed lucrative. BitConnect Coin reached a high of $463.31.
Kumbhani was accused by the US Securities and Exchange Commission in September of his participation in the $2 billion fraud. Glenn Aracro, BitConnect’s principal promoter, and he both pled guilty. Arcaro got a percentage of each loan made via BitConnect’s lending programmes. He profited up to 15% on each deal, earning roughly $24 million in total. Last November, the DOJ stated that it would sell $56 million in cryptocurrency taken from BitConnect’s top marketer in what it called the “largest single recovery of a cryptocurrency fraud by the US to date.”
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