A federal grand jury has indicted BitConnect founder Satish Kumbhani with allegedly defrauding $2.4 billion through the crypto Ponzi scheme.
The US Department of Justice announced on Friday that a San Diego federal grand jury had charged Kumbhani with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business and conspiracy to commit international money laundering.
Through BitConnect's "Lending program," Kumbhani and his co-conspirators allegedly defrauded investors out of $2.4 billion. According to the DOJ, BitConnect executives and promoters claimed the firm's trading technology was a means to generate significant profits and guarantee returns for investors, but instead used the investments to pay earlier investors in a Ponzi scheme format.
The indictment further alleges that Kumbhani directed a network of BitConnect promoters to pump the price of the firm's BitConnect Coin, and also evaded US financial regulations to avoid scrutiny.
He faces a maximum of 70 years in prison if convicted of all charges. Kumbhani is an Indian citizen, and remains at large, according to the DOJ.
Kumbhani separately faces a civil case lodged by the Securities and Exchange Commission (SEC), which the securities regulator filed in September of last year. The complaint alleges BitConnect's lending program constituted a fraudulent and unregistered offering. It joined other cases against BitConnect representatives and promoters, some of which have already resulted in judgments compelling them to pay millions.
Law enforcement has sought potential BitConnect victims in recent years as it builds a case against the firm's executives and promoters. The FBI Cleveland Field Office and IRS Criminal Investigation division continues to investigate the case. Special Agent in Charge Eric Smith from the FBI's Cleveland Field Office said the international aspects of the case won't deter the FBI's investigation.
“Today’s indictment reiterates the FBI’s commitment to identifying and addressing bad actors defrauding investors and sullying the ability of legitimate entrepreneurs to innovate within the emergent cryptocurrency space,” he said in a statement.
The DOJ encouraged any victims of the scheme to report their experiences.