The founder of a cryptocurrency company BitConnect was indited by a grand jury with federal crimes for allegedly defrauding investors out of more than $2 billion, according to the U.S. Attorney's Office in San Diego
According to the U.S. Attorney’s office, Satishkumar Kurjibhai Kumbhani, 36, of Surat, Gujarat, India, is accused of what is believed to be the largest cryptocurrency fraud ever criminally charged.
BitConnect investors claim they were misled by the company’s claims of using proprietary technology known as the "BitConnect Trading Bot" and "Volatility Software”, to turn investors' money into huge returns.
The U.S. Attorney's Office said BitConnect operated like a ponzi scheme by using investor funds to repay other BitConnect investors.
Kumbhani was charged in a separate alleged scheme with artificially inflating the price of BitConnect's digital currency, known as BitConnect Coin or BCC. The U.S Attorney’s office said through his promoters, he created the appearance that there was an increased demand for BCC.
Kumbhani allegedly operated an unlicensed money transmitting business, according to prosecutors. He took part in an international money laundering conspiracy in which Bitcoin and BCC transfers with investors and cryptocurrency purchasers were made with proceeds of the fraud.
He faces conspiracy to commit wire fraud, wire fraud, conspiracy, operation of an unlicensed money transmitting business and money laundering conspiracy charges. Each carries a maximum penalty of 20 years in prison.
BitConnect’s top promoter in the United States, Glenn Arcaro, pleaded guilty to federal charges last year for his role in the scheme and is scheduled to be sentenced in May.
Victims were encouraged to go online for information on their rights, the ability to submit a victim impact statement and to identify themselves as a potential victim.
