The man behind the largest cryptocurrency Ponzi scheme has been indicted by the Department of Justice.
With over 4 years passing since the infamous BitConnect scam, the person responsible is yet to be found. Satish Kumbhani, the creator of Bitconnect, has been on the run since then and is facing a hefty amount of repercussions if he gets caught.
Based on the document published by the Office of Public Affairs, Kumbhani was charged with "orchestrating a global Ponzi Scheme" by taking advantage of investors via staking options with high-yield returns.
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While, initially, the platform operated via traditional Ponzi standards by paying off initial backers with money from recent investors, the price of the BitConnect Coin (BCC) got propped up by the team itself to build hype, and make it seem legit.
BCC went up to immense heights in December of 2017, reaching an all-time record price of $463.
However, the coin started plummeting hard in mid-January of 2018 when BitConnect was abruptly taken down, and, at the end of the month, it wasn't worth more than $10. Not long after the dip, BCC reached the lowest of lows - about $0.4 in June of 2018 and was never able to bounce back.
At that time, cryptocurrencies weren’t as heavily regulated and monitored by government authorities, and, according to the document, BitConnect was "never registered with FinCEN, as required under the Bank Secrecy Act." This led to the staking platform operating as it pleases, without any intervention from law enforcement.
With that being said, the success of the platform’s coin got noticed by regulators in the US at the beginning of 2018, which was just weeks before the platform shut down. Consequently, Kumbhani and his colleagues raked in about $2.4 billion from the project.
Ryan L. Korner, who is the Special Agent in Charge of IRS Criminal Investigation Office in LA, spoke on the Bitconnect scandal, stating:
"As cryptocurrency gains popularity and attracts investors worldwide, alleged fraudsters like Kumbhani are utilizing increasingly complex schemes to defraud investors, oftentimes stealing millions of dollars."
According to the document, the founder of Bitconnect Satish Kumbhani is currently facing five counts of financial fraud: "conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering."
Kumbhani will be sentenced to 70 years in prison if all charges hold up in court, but the creator of the largest crypto scam in the world is yet to be found.
At a similar time when the BitConnect project emerged, a group of fraudsters in India were operating a crypto influencer scam, raking in $5.4 million, before getting caught on February 19th of 2022.
