Washington, Feb 25 (EFE).- The United States Justice Department Friday said it has indicted the founder of defunct BitConnect cryptocurrency exchange platform for orchestrating a global Ponzi scheme and obtaining $2.4 billion from investors.
The 36-year-old Indian origin, Satish Kumbhani, allegedly misled investors about BitConnect’s “lending program” by operating as a Ponzi scheme to pay earlier investors with money from later investors.
Kumbhani is at large.
“Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors,” the justice department said in its indictment note.
BitConnect was launched in February 2016. It became popular on social media.
At one point in time, its coin traded more than $460. However, it is valued at around $0.67 today, according to the crypto price tracking website CoinMarketCap.
The indictment alleged that after operating for approximately one year, Kumbhani abruptly shut down the program and directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, a commodity known as BitConnect Coin (BCC).
Kumbhani allegedly evaded US regulations that govern the financial industry, including those enforced by the Financial Crimes Enforcement Network (FinCEN).
The accused and his co-conspirators concealed the location and control of the fraud proceeds obtained from investors by commingling, cycling, and exchanging the funds through BitConnect’s cluster of cryptocurrency wallets and various global exchanges.
“Crime, particularly crime involving digital currencies, continues to transcend international boundaries,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.
“The department is committed to protecting victims, preserving market integrity, and strengthening its global partnerships to hold accountable criminals engaging in cryptocurrency fraud. We thank our partners around the world for their continued efforts.”
Kumbhani is charged with conspiracy to commit wire fraud, commodity price manipulation, operation of an unlicensed money transmitting business, and international money laundering.
If convicted of all counts, he faces a maximum penalty of 70 years in prison. EFE