America’s top financial regulator has filed a civil lawsuit against the founder of BitConnect, who allegedly played a role in a $ 2 billion cryptocurrency scam.
The US Securities and Exchange Commission (SEC) has indicted BitConnect founder Satish Kumbhani, whose whereabouts are unknown. Kumbhani was allegedly involved in a fraudulent securities offering that allowed the company to raise $ 2 billion. The accused sold unregistered securities related to the company’s loan program throughout 2017, according to documents filed with a federal court in New York.
Lara Shalov Mehraban, of the SEC’s New York regional office, noted : “We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets.”
The Indian citizen, in full knowledge of the matter, thus violated the rules of investor protection according to the SEC. The case against the executives of the platform and a third-party company, Future Money, has been a protracted saga. In total, five people who participated in the scheme by creating misleading testimonials on YouTube were prosecuted at the end of May.
This latest action comes three years after the crypto exchange and lending platform ceased all activity in January 2018 after receiving warnings from several state authorities in the United States. The crypto exchange platform is also reported to have suffered denial of service attacks.
The federal regulator intends to recover ill-gotten funds from the system that promised good returns to retail investors. The company’s senior staff assured investors that the platform’s volatility trading software could deliver returns of up to 40% per month. Investors were also promised annualized earnings of 3,700 % in exchange for their investment.
The company’s former director and promoter, Glenn Arcaro, has already been charged with fraud and pleaded guilty yesterday. Arcaro and his company Future Money earned about $ 24 million in referral commissions. He has since been ordered to repay investors in the now-defunct crypto platform a sum of $ 24 million.
Kumbhani, meanwhile, acted as the US promoter of the crypto platform when it was still operational. The SEC accuses Khumbhani and others of funneling investors ‘ funds and using them for personal gain. The SEC press release adds that the scam was a coordinated scheme and involved other promoters working around the world.