BitConnect Founder Accused of Global Pyramid Scheme

Bitconnect shut down in 2018, but US authorities failed to apprehend those responsible and are now blaming one of its founders.

BitConnect founder is accused of a global pyramid scheme

Unlike the BCC token that died a few years ago, the case of Bitconnect, the crypto project that created the aforementioned cryptocurrency, is far from over.

This Friday, the U.S. Department of Justice announced that one of BitConnect’s founders has been formally charged with fraud related to the crypto world’s most famous Ponzi scheme.

In an official press release, the Justice Department said that Satish Kumbhani, 36, of Hemal, India, was charged with conspiracy to commit cryptocurrency fraud, electronic fraud, conspiracy to manipulate commodity prices, operation of an unlicensed money transfer and international money laundering business.

All fees relate to the operation of Bitconnect. Sold as a lending program, the service eventually turned out to be a global pyramid scheme, ranking 20th on the list of cryptocurrencies with the highest market cap.

As revealed by the Justice Department, Kumbhani defrauded an unspecified number of investors and secured about $2.4 billion in illicit funds.

Kumbhani has devised a scheme in which he offers trading bot services and volatility software, promising that those using Bitconnect will reap significant profits from the cryptocurrency. The truth is that customers make money in proportion to who they join and are paid with funds from new users – this is a sign of a Ponzi scheme.

Special Agent Eric B. Smith of the FBI’s Cleveland Field Office said in official statements that the Bitconnect case is indicative of the extent to which scammers are infiltrating the crypto world to find ways to circumvent the law:

“Today’s indictment reinforces the FBI’s commitment to identifying and addressing bad actors who are defrauding investors and undermining the ability of legitimate entrepreneurs to innovate in the burgeoning crypto space. Arming a proven fraud plan that takes a new twist and builds on it abroad will not stop the FBI’s dedication and determination from diligently investigating and bringing scammers like So come to Justice to justice.”

The SEC has investigated everyone involved in the BitConnect incident

US authorities are actively investigating the incident and are looking for everyone involved. In May 2021, the United States Securities and Exchange Commission (SEC) filed a lawsuit against five people associated with BitConnect. Satish Kumbhani is not on the list.

Shortly thereafter, the SEC settled with three of them, cutting BTC and fiat by over $12 million as penalties.

And late last year, the SEC issued a ruling against Glenn Arcaro and his company, Future Money, for violating the Securities and Exchange Act.

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