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SEC struggles to find BitConnect's creator sentenced to $2.4 billion scam

3 min reading

BitConnect's creator has been accused of unlawfully acquiring funds and scamming over $2 billion from American investors.

BitConnect founder Satish Kumbhani, who was sued by the US Department of Justice in a $2.4 billion Ponzi scheme, has gone missing since his conviction.

The Securities and Exchange Commission stated in a court statement on Monday that Kumbhani's locations are unidentified. The SEC reported that Kumbhani's last known location was in his homeland India, but he has been untracked since the operator of the BitConnect Ponzi scam was accused by the SEC of misleading American investors for more than $2 billion.

The SEC said in its statement that the sentenced founder has most likely left for a foreign country and that "Kumbhani’s location remains unknown, and the Commission remains unable to state when its efforts to locate him will be successful, if at all." The founder is accused of wire fraud, running an unauthorized fund-transferring business, and three hoaxes: wire fraud, commodity price manipulation, and international money laundering.

The BitConnect story goes back to the ICO period and was one of the most visible and discussed initiatives at the time. The crypto project, which was founded in 2016, became a global sensation by mid-2017, collecting billions of dollars from worldwide investors. The venture offered a lending system based on proprietary "trading bots" and "volatility software" that would pay investors 10% in BCC tokens.

The Department of Justice convicted Kumbhani of operating a Ponzi scheme through BitConnect's lending business, which managed to scam $2.4 billion from investors. At the apex of the market craze in December 2017, Bitconnect's native token, BCC, hit an all-time high trading price of $463.31, giving it a market valuation of $3.4 billion.

By January 2018, the founders had pulled the rug out from under the project, forcing the token price to drop to almost zero and suffering huge losses to investors.

Kumbhani was also charged by the DOJ with inflating BCC's market demand to entice more naive investors. The project, like many others during the ICO trend, turned out to be a huge pyramid scheme in which the creators utilised early revenue to pay back old investors before leaving with billions based on enthusiasm and the ICO mania. Many project promoters in Australia and the United States have already been sentenced and served prison time.




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