TL; DR Breakdown
- Kumbhani charged for operating a Ponzi scheme
- Bitconnect scammed investors of more than $2 billion
- Kumbhani could face up to 70 years of jail time
The Department of Justice has charged Bitconnect founder for operating a Ponzi scheme. The platform, led by Satish Kumbhani, deceived traders and defrauded them of their hard-earned money during its operation. As per a DOJ document, a grand jury in San Diego’s court charged the founder for his role in using a program of the platform to carry out his illicit activities. Reports also claim that the investors lost more than $2 billion to the platform.
Bitconnect scammed investors of $2.4 billion
The document said the platform’s operations were like that of a Ponzi scheme, where old users were paid profits from funds from new investors. At the time, the platform’s native token saw a climb to reach $463 per token. At the time, the token’s market capitalization was briefly around $3 billion.
All hell broke loose after the token price saw a sharp decline which caused investors holding the tokens to lose heavily. Kumbhani was said to have sold investors a promise of huge profits while using Bitconnect. After the collapse, only old investors received a portion of what they invested, while new investors were not paid.
Kumbhani could face 70 years in jail
The DOJ document also positioned that the Bitconnect founder manipulated the market to make it look like the BCC token was high in demand. The money generated from the investment was sent to wallets held by Bitconnect and other exchanges across the world. A previous indictment saw one of the platform’s promoters, Glen Arcaro, concede to commuting fraud while he was at the company. The DOJ also mentioned that the founder flouted the Bank Secrecy Act after failing to register his business with FinCEN.
The founder has been charged with various offenses bordering on wire fraud, money laundering, and other crimes in the document. Bitconnect is still involved in an ongoing investigation, and should Kumbhani be found guilty, he is going to jail for a maximum of 70 years. In other news, a class action lawsuit has been brought before a jury to try celebrities for influencing SafeMoon tokens. According to several reports, the case mentioned that SafeMoon was run like a Ponzi scheme after the founders promised investors of massive gains. However, the DOJ has released a website where those that lost money can officially register as victims.
