The US Department of Justice (DOJ) has charged Satishkumar Kurjibhai Kumbhani with using the infamous BitConnect cryptocurrency platform to commit fraud.
According to US Attorney Randy Grossman, the indictment alleges a massive cryptocurrency scheme that defrauded investors out of more than $2 billion. The United States Attorney’s Office and their law enforcement partners are dedicated to bringing victims of cryptocurrency fraud to justice.
According to the DOJ, Kumbhani, an Indian citizen, conspired with others to defraud investors out of more than $2 billion. It is believed to be the largest cryptocurrency fraud case ever prosecuted.
The court claims BitConnect deceived investors by promoting its Lending Program, which it claims uses proprietary technology known as the BitConnect Trading Bot and Volatility Software to generate massive profits and returns. Meanwhile, BitConnect was merely used to promote a Ponzi scheme, in which the funds of new investors were used to pay the earlier investors.
Kumbhani was also charged in a separate conspiracy to manipulate the price of BitConnect’s token, known as BCC, causing increased demand for the cryptocurrency.
The DOJ also charged the BitConnect founder with operating an unlicensed money transmitting business, as well as his participation in a money laundering conspiracy involving the transfer of Bitcoin (BTC) and BCC to investors and crypto purchasers using funds obtained through the alleged fraud.
Glenn Arcaro pleaded guilty to his role in the alleged scheme last September, prompting the charges. Arcaro, 44, was BitConnect’s director and promoter. When he is sentenced on May 6, 2022, he faces up to 20 years in prison.
In the meantime, the DOJ has asked BitConnect victims to identify themselves, providing a link to a form where an impact statement can be submitted. As the cryptocurrency industry grows and mainstream adoption increases, bad actors have turned it into a playground for their nefarious activities.