The Securities and Exchange Commission has filed a new complaint against the now-defunct crypto Ponzi scheme BitConnect, claiming that those behind it conducted a fraudulent and unregistered securities offering totaling $2 billion.
The complaint hit the docket Wednesday with a demand for a jury trial against BitConnect, Satish Kumbhani, promoter Glen Arcaro and the company Future Money Ltd. The SEC alleges that BitConnect's lending program constituted a fraudulent and unregistered securities offering.
All told, the BitConnect scheme brought in 325,000 BTC, according to the SEC. That amounts to $15 billion at today's prices and $2 billion at the time of the alleged scheme.
This new court action joins another case filed against five others tied to BitConnect. The SEC lodged a complaint against Joshua Jeppesen, Trevon Brown, Craig Grant, Ryan Maasen and Michael Noble in May of this year. By August, the SEC had won a $12 million judgment against Noble and Jeppesen.
The five promoters were led by Arcaro, according to the SEC, and are referred to as "the Arcaro Promoters" in today's complaint.
"Arcaro and Arcaro Promoters — none of whom was registered with the Commission as a broker-dealer, or associated with a registered broker-dealer — touted the supposedly lucrative potential of investing into the Lending Program to potential retail investors, through 'testimonial'-style videos they created and published on YouTube, sometimes multiple times a day, with referral links to the Lending Program."
The complaint alleges BitConnect and founder Kumbhani established this network and rewarded their promotion through commission, "a substantial portion of which they concealed from investors," according to the SEC.
Kumbhani's LinkedIn page still has him listed as working at BitConnect as a "full time promoter to educate people about cryptocurrency all around the world through BitConnect Network." The page claims the firm is the "fasted[sic] growing bitcoin and Crypto community educating people about Cryptocurrencies and its opportunities."
The SEC published a statement alongside the complaint, saying it contends that Kumbhani and his associates "siphoned investors' funds off for their own benefit by transferring those funds to digital wallet addresses controlled by them, their top promoter in the U.S., defendant Glenn Arcaro, and others."
"We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets," said Lara Shalov Mehraban, Associate Regional Director of SEC's New York Regional Office. "We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space."