A federal jury in San Diego filed an indictment last Friday against the creator of the BitConnect cryptocurrency for organizing and running a financial pyramid. At its peak, the project’s total market capitalization reached $ 3.4 billion as the value of a single BCC token rose from less than $ 1 to nearly $ 500.
The creator of BitConnect with accusations in the US. Cryptocurrency creators are threatening 70 years behind bars
According to court documents, 36-year-old Satish Kumbhani, founder of BitConnect, misled investors about BitConnect’s “Loan Program”. As part of it, Kumbhani and associates advertised the BitConnect technology known as “BitConnect Trading Bot” and “Volatility Software” that was intended to generate substantial profits and guaranteed returns by using investors’ money to trade in the volatility of cryptocurrency markets. However, as alleged in the indictment, BitConnect acted as a typical financial pyramid, paying early BitConnect investors money from people later joining the project. In total, Kumbhani and his associates extorted about $ 2.4 billion from investors. The indictment further alleges that after acting for about a year, Kumbhani suddenly closed the Loan Program. He then instructed his network of promoters to boost the BitConnect currency with manipulations, creating a false impression of market demand for BCC. Kumbhani and his associates also concealed the location and control of fraud income obtained from investors by linking, circulating and exchanging funds through BitConnect cryptocurrency wallets and various international cryptocurrency exchanges, the US Department of Justice reveals.
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In an attempt to avoid regulatory control and oversight of BitConnect’s cryptocurrency offer, Kumbhani bypassed U.S. regulations governing the financial industry, including regulations enforced by the Financial Crimes Enforcement Network (FinCEN). Although BitConnect has been in the business of transferring money through its digital currency exchange, BitConnect has never registered with FinCEN as required under the Banking Secrecy Act. – Crime, and in particular digital currency crime, continues to cross international borders. The department is committed to protecting victims, preserving market integrity, and strengthening its global partnerships to bring criminals involved in cryptocurrency frauds to justice. We thank our partners around the world for their relentless efforts, said Assistant Attorney General Kenneth A. Polite Jr. If convicted of all the charges, Kumbhani faces a maximum total term of 70 years in prison. A federal district court judge will determine the sentence based on US sentencing guidelines and other statutory factors. Kumbhani remains at large for the time being.
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