BitConnect founder, Satish Kumbhani is being unlawfully accused of rating funds and duping American investors of around $2 billion. He was accused by the U.S Department of Justice of a $2.4 billion Ponzi scheme. The court said the Securities and Exchange Commission said that the location of Kumbhani is still unknown. The SEC said that the last location of Kumbhani was in India and remained untraced from the time when the promoter for BitConnect Ponzi Scheme was booked for duping American investors of above $2 billion. In the filing, SEC reported that the condemned founder has maybe eloped to a different country and the location continues to be untraceable. The Commission is not sure when the efforts to find him will be successful. The founder is accused of wire fraud, regulating money transmitting unlicensed business and there are three conspiracies namely-
Committing wire fraud;
Commodity price manipulation;
International money laundering
The DOJ accused Kumbhani of running a Ponzi scheme through BitConnect’s lending policy where the project was governed to illegally draw $2.4 billion from investors. Bitconnect’s native token BCC computed an all-time-high trading price of $463.31 at the peak of the market uproar in December 2017 reaching a market capitalisation of $3.4 billion. The founders’ rug pulled the plan by January 2018, slamming the token rate to nearly zero and effecting huge losses to investors. The DOJ also indicted Kumbhani of building a fake market need for BCC to entice more unfamiliar investors. The program proved to be a massive pyramid strategy where the founders used early accounts to pay the old investors and then later ran away after obtaining billions based on hype and ICO craze. Many promoters of the program across Australia and the U.S. have already been penalized and facing jail.
Have a look at this- The US SEC has raised a concern on the conversion of Grayscale Bitcoin Trust into Bitcoin Spot Exchange Trade Fund
