Key Insights:
- BitConnect founder Satish Kumbhani indicted for Ponzi Scheme
- In 2021, BitConnect and Kumbhani were sued by the SEC.
- Penalties for illegal activity are hefty, with some jurisdictions calling for life sentences.
BitConnect was a proof-of-stake (PoS) platform allowing users to buy Bitconnect Coin (BCC) to earn interest. Users could sell Bitcoin (BTC) for BCC and then lock in the BCC price and earn daily interest over defined lock-in periods.
In September 2021, the SEC filed an action against BitConnect, founder Kumbhani, its top promoter, and his affiliated company. The action alleged that they defrauded retail investors out of $2bn through the fraudulent and unregistered offering of investments.
From early January 2017 through January 2018, the SEC claimed that the defendants siphoned money by transferring funds to digital wallet addresses. The wallets were in the control of Bitconnect, its founder, and top U.S promoter, Glenn Arcaro among others.
Grand Jury Indicts BitConnect Founder
On Friday, the United States Justice Department (DoJ) announced the indictment of BitConnect founder Satish Kumbhani. A federal grand jury indicted Kumbhani with “orchestrating a global Ponzi scheme.”
As per the press release, Kumbhani “misled investors about BitConnect’s Lending Program.” The press release goes on to say: “BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his…
