The US Department of Justice is suing the BitConnect founder over a $2.4 billion global pyramid scheme

Bitconnect was shut down in 2018, but the US authorities did not take action against the promoters at the time. As of now, they’re incriminating one of the co-founders of the project.

Satish Kumbhani – Founder of Bitconnect

Unlike the BCC token, which completely collapsed a few years ago, the case of Bitconnect — the project that created the aforementioned cryptocurrency — isn’t really over yet.

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

BitConnect (BCC) price history. Source: CoinMarketCap

The drama isn’t over yet

In one Notice Satish Kumbhani, 36, of Hemal, India, has been charged with conspiracy to commit money transfer fraud, wire fraud, conspiracy to manipulate the price of goods, an unlicensed money transfer business and conspiracy to commit cross-border money laundering, according to an official press release from the Justice Department.

All of the above offenses are related to Bitconnect’s activities. The service was offered as a lending program but eventually turned out to be a pyramid scheme of global proportions, ranking 20th on the list of cryptocurrencies by market cap.

As the Justice Department explained, Kumbhani defrauded an unspecified number of investors and raised nearly $2.4 billion in illicit funds.

Kumbhani has devised a scheme in which he offers trading bots and volatility software, promising that those who have used Bitconnect will make significant profits from the cryptocurrency. The fact that customers make money is proportional to the number of people they get into the business and get paid with new users’ money – that’s the trait of Ponzi schemes.

Leading Special Agent Eric B. Smith of the FBI’s Cleveland office said in official statements that the Bitconnect case is indicative of the growing scale of scammers entering the crypto world looking for ways to circumvent the law:

“Today’s allegations reaffirm the FBI’s commitment to identifying and fighting the bad guys who are defrauding investors and tarnishing the ability of legitimate entrepreneurs to innovate in the new crypto space.” Covering up a real and proven fraud scheme with a new twist and overseas operations is becoming the resolve and devotion of the FBI to meticulously investigate and shine the spotlight on the perpetrators of the crime.”

The SEC also helped bring Bitconnect to court

US authorities have been actively investigating the incident, tracking down everyone involved and attempting to confiscate as much money as possible. 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 this list.

Shortly after, the SEC reached a settlement with 3 of them and fined them over $12 million in BTC and fiat.

Late last year, the SEC ruled against Glenn Arcaro and his company, Future Money, for violating the Securities and Exchange Act.

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