March 1, 2022
By Sharan Kaur Phillora
The U.S. Division of Justice (DOJ) introduced Friday that Satishkumar Kurjibhai Kumbhani, a citizen and resident of India, with multiple crimes for his alleged role in a massive criminal conspiracy involving the cryptocurrency company he founded, BitConnect.
Here’s everything we know:
- According to the law department, the 36-year-old from Hemal, India, misled investors by claiming that the scheme’s “Lending Program” could “produce huge profits and assured returns” by employing “Bitconnect Trading Bot” and “Volatility Software.”
- Attorney for the Southern District of California Randy Grossman said, “This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion. The US Attorney’s Office and our law enforcement partners are committed to pursuing justice for victims of cryptocurrency fraud.”
- Under the BitConnect’s “Lending Program”, Kumbhani, along with his co-conspirators promoted BitConnect’s purported proprietary technology, “BitConnect Trading Bot” and “Volatility Software”, as being able to generate substantial profits. The platform guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.
- The court has alleged that BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. While running the scheme, Kumbhani and his co-conspirators generated approximately $2.4 billion from investors.
- In fact, Kumbhani has allegedly shut down the “Lending Program” abruptly after operating for approximately one year. He then went on to instruct a network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, BitConnect Coin (BCC), to create the false appearance of legitimate market demand for it.
- At the height of its fame, BitConnect reached a peak market capitalization of $3.4 billion. But, the threads started unraveling in 2018. The company closed its exchange in January that very year after receiving cease-and-desist letters from regulators in Texas and North Carolina.
- Kumbhani has been 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 he gets convicted on all the above counts, he can face a maximum total penalty of 70 years in prison.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.