BitConnect’s Indian founder got charged in a $2.4 billion crypto scheme according to the reports from the federal grand jury in San Diego show so let’s read more today in our latest cryptocurrency news.
The broad indictment claims that he cheated investors out of $2.4 billion in a Ponzi scam. The prosecutors said that the fraud is the biggest of its sort that is getting prosecuted criminally. Satish Kumbhai from Gujarat, India swindled investors regarding BitConnect’s lending program as per the filings. Based on the indictment, Kumbhani founded Bitconnect in 2016 as a classic ponzi scam and the US DOJ said that the exchange reached apeak market value of $3.4 billion.
The prosecutors alleged that BitConnect’s technology made some misleading promises about the returns based on phony volatility software that monitored the BTC exchange markets. According to the court filings, the program was created to trade automatically and successfully by buying and selling BTC’s volatility. A large portion of the technology remained unknown to investors and when someone requested a demo, Kumbhani was quite evasive:
“So you’re asking me a pretty difficult question. We are not sharing anything for privacy concerns.”
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BitConnect’s Indian founder was charged after the platform halted operations in 2018 after receiving cease and desist letters from North Carolina and Texas state regulators. The repercussions were fast with the South Korean investors becoming paranoid and one promoter informed Kumbhani that were discussing suicide in the chat rooms according to the indictment. The US SEC filed charges against Kumbhani for securing more than $2 billion in an unregistered offering and Glenn Arcaro, BitConnect’s main promoter in North America pled guilty the very same day.
Kumbhani is facing charges for conspiracy to commit price manipulation and wire fraud while also operating an unregulated money transfers business and conspiracy to launder money. Kumbhani also violated the US financial industry regulations like the ones imposed by the US FinCEN. For example, despite the fact that Bitconnect transacted money via digital currency exchanges, Bitconnect didn’t register with FinCEN and as required by the US Bank Secrecy act. As BTC grows in popularity and encourages foreign investors from across the world alleged fraudsters like Kumbhani are deploying complicated methods to deceive investors according to special agent Ryan Korner.
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