New Delhi: The founder of cryptocurrency investment platform BitConnet, who is an Indian national, has allegedly been charged with staging a global Ponzi scheme worth $2.4 billion, prosecutors say federal.

Court documents informed that Satish Kumbhani, a resident of Hemal in Gujarat, misled investors about BitConnet’s “loan scheme”. BitConnet hit a market cap high of $3.4 billion, the Justice Department said.

“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion,” U.S. Attorney Randy Grossman of the Southern District of California said Friday.

The 36-year-old founder has been charged with conspiracy to wire fraud and price manipulation, which is an operation of an unlicensed money transfer business and conspiracy to commit international money laundering. Notably, if he faces conviction by all courts, a maximum sentence of 70 years in prison will be incurred.

The “loan scheme,” under which founder Kumbhani and his co-conspirators tagged BitConnet’s claimed proprietary technology, “BitConnect Trading Bot” and “Volatility Software,” for generating substantial profits. They guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.

According to the alleged accusation, BitConnet operated as a Ponzi scheme by paying early BitConnet investors with money from later investors. Kumbhani and his co-conspirators acquired nearly $2.4 billion from investors.

The indictment, which was decided by a federal grand jury in San Diego, alleged that after operating for at least a year, Kumbhani suddenly shut down the “loan program.” He later ordered his group of promoters to deceptively manipulate and support the price of BitConnet’s digital currency, BitConnet Coin (BCC), creating a double appearance of legitimate market demand.


In addition, the accused also protected the location and control of fraud proceeds acquired from investors by mixing, cycling and trading the funds through BitConnet’s group of cryptocurrency wallets and various crypto exchanges. international currencies, alleged the Department of Justice.

Additionally, Kumbhani dodged US regulations governing the financial industry, including those enforced by the Financial Crimes Enforcement Network (FinCEN). This means that although BitConnet has been associated with the activity of transmitting money through its digital cryptocurrency exchange, it has never registered with FinCEN, as required by bank secrecy law.