By Ed D - Crypto Investor 11-07-2022
Despite shutting in 2018, BitConnect has struggled to shake its terrible reputation. The US Department of Justice has charged one of the cryptocurrency investment project's founders with operating a crypto asset-related Ponzi scheme.
The creator of BitConnect has been charged
Satish Kumbhani, one of the exchange's co-founders, was charged with wire fraud, commodities price manipulation, running an unregistered money transfer company, and international money laundering, according to a news statement from the Department of Justice.
The fees are related to the BitConnect project's operation. BitConnect was advertised as a lending platform, but it quickly turned into a pyramid scheme. BCC, the project's token, was once among the top 20 most valuable cryptocurrencies by market capitalization.
Kumbhani was able to raise about $2.4 billion in funding through BitConnect. He offered a trading bot service to trade crypto and trading software as part of the Ponzi scam, promising investors who used BitConnect big gains. However, because existing members were cashing out crypto with money from new customers, the enterprise worked as a Ponzi scam.
The case proved that criminals were migrating to cryptocurrency, according to Eric B. Smith, special agent in charge of the FBI Cleveland Field Office.
"Today's indictment reaffirms the FBI's commitment to identifying and prosecuting bad actors who deceive investors and stifle genuine companies' ability to develop in the nascent cryptocurrency field," the statement said.
Case of BitConnect Fraud
US officials have been closely following the BitConnect issue. They've been actively searching for anyone connected to the investigation and seizing assets. The Securities and Exchange Commission (SEC) of the United States filed a complaint against five persons connected to the BitConnect initiative in May of last year. Kumbhani, on the other hand, was not charged.
The SEC reached a settlement with three of these people, obtaining more than $12 million in Bitcoin and other cryptocurrencies. Glenn Arcaro, who operated Future Money and violated the Securities Act and the Exchange Act, got a judgment against the commission at the end of 2021. This comes as the SEC tightens the noose around cryptocurrency initiatives.