US charges Indian national in $2.4bn BitConnect Ponzi scheme

Accused Kumbhani, 36, faces total of 70 years in prison if found guilty on all counts

Smartphone displays company name and logo of BitConnect                                 
The US Justice Department has announced the latest person it is pursuing as part of its BCC crypto fraud investigation – Photo:Shutterstock

The US Department of Justice (DOJ) has brought charges against Indian national Satishkumar Kurjibhai Kumbhani, the founder of cryptocurrency BitConnect, as part of its investigations into a global fraud that cost investors more than $2bn (£1.5bn, €1.7bn).

Facing multiple charges in a criminal conspiracy

“A federal grand jury returned an indictment today charging Satishkumar Kurjibhai Kumbhani, a citizen and resident of India, with multiple crimes for his alleged role in a massive criminal conspiracy involving the cryptocurrency company he founded, Bitconnect,” said the DOJ in a statement. 

Investors were attracted by promises that the company could “generate substantial profits and guaranteed returns”, said the DOJ in a second statement, adding: ”However,  BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators obtained approximately $2.4bn from investors.”

Having traded at $0.17 in 2017 after its initial coin offering (ICO), BitConnect went on to reach $463 that same year and become one of the 20 largest cryptocurrencies in the world. At its peak, the crypto’s market capitalisation was over $2.8bn. Less than 18 months after this record high, the crypto’s price sunk to below $0.40.

Kumbhani, aged 36, of Gujurat, India, is accused of having “directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, a commodity known as Bitconnect Coin (BCC).”

Maximum sentence of 70 years in jail

The charges against Kumbhani include conspiracy to commit wire fraud, wire fraud, operation of an unlicensed money transmitting business, conspiracy to commit commodity price manipulation and conspiracy to commit international money laundering – which the DOJ added: “If convicted of all counts, he faces a maximum total penalty of 70 years in prison.” 

Reacting to the case, Randy Grossman, the US Attorney for the Southern District of California, said: “This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2bn. The US Attorney’s Office and our law enforcement partners are committed to pursuing justice for victims of cryptocurrency fraud.” 

Last November, the Justice Department announced that it was selling approxiamately $57m worth of cryptocurrency funds seized from the BitConnect programme.

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