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

cointelegraph.com:

The founder of the infamous crypto exchange BitConnect, Satish Kumbhani, has been charged for allegedly misleading investors globally and defrauding them of $2.4 billion in the process.

According to the Department of Justice (DOJ), a San Diego-based federal grand jury specifically charged Kumbhani for orchestrating the alleged Ponzi scheme via BitConnect’s “Lending Program”:

Back in 2017 amid the hype, BitConnect (BCC) recorded an all-time high of $463.31 in trading price, which according to the DOJ reached a peak market capitalization of $3.4 billion. However, as evidenced by the graph above, the prices soon collapsed within a few months causing massive losses to investors. 

Kumbhani, who resides in Gujarat, India, allegedly promised investors “ to generate substantial profits and guaranteed returns” under the BitConnect’s “Lending Program.” The indictment alleges Kumbhani used the funds from new investors to partially pay back the old investors until abruptly shutting down the program — operating a textbook Ponzi scheme.

The DOJ further stated that Kumbhani and his co-conspirators faked market demand for BCC through market manipulation. The resultant investments were allegedly concealed and transferred via “BitConnect’s cluster of cryptocurrency wallets and various internationally-based cryptocurrency exchanges.”

Supporting DOJ’s allegations, back in Sept. 2021, former BitConnect promoter Glenn Arcaro pled guilty to fraud charges related to his role in the now-defunct crypto exchange and lending platform.

The indictment also alleges that Kumbhani evaded U.S. regulations by failing to register with the Financial Crimes Enforcement Network (FinCEN), as required under the Bank Secrecy Act.

All in all, “Kumbhani is charged with