The founder of cryptocurrency investment platform BitConnect has been indicted on charges of orchestrating a global Ponzi scheme worth $2.4 billion, federal prosecutors said.
According to court documents, Satish Kumbhani (36) of Hemal in Gujarat misled investors about BitConnect’s “Lending Programme.” BitConnect reached a peak market capitalisation of $3.4 billion, the Department of Justice said.
“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion,” US Attorney Randy Grossman for the Southern District of California said on Friday.
Kumbhani is 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 convicted of all counts, he faces a maximum total penalty of 70 years in prison.
Under the “Lending Program”, Kumbhani, who is at large, and his co-conspirators touted BitConnect’s purported proprietary technology, “BitConnect Trading Bot” and “Volatility Software”, as being able to generate substantial profits. They guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.
As alleged in the indictment, BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors.
The indictment, which was returned by a federal…
