The U.S. grand jury indicted Satish Kumbhani, the founder of BitConnect, on accusations that he managed and supervised a global Ponzi scheme that robbed $2.4 million from investors, stated the Department of Justice.

In detail, Kumbani misled investors about BitConnect’s so-called proprietary technology, which falsely claims to offer returns based on bogus “volatility software” that tracked cryptocurrency trading markets. Prosecutors also said that the Ponzi mastermind distributed new investments to pay old investors while operating an illegal money laundering business.

That BitConnect Coin Angle

The indictment came four years after BitConnect received cease-and-desist notices from Texas and North Carolina regulators. In addition, on Sep. 1, 2018, the U.S. Securities and Exchange Commission (SEC) sued Kumbhani for illegally raising more than $2 billion. The same day, BitConnect’s top promoter, Glenn Arcaro, admitted guilt of wrongdoings.

Kumbhani also directed his promoters to falsely manipulate and boost the price of BitConnect’s native cryptocurrency called the BitConnect Coin (BCC). He did it “to create the false appearance of legitimate market demand for BCC,” the prosecutors noted, adding that Kumbhani and his co-conspirators also hid the whereabouts of the fraud money via “commingling, cycling, and exchanging the funds.”

BitConnect Coin market went dead abruptly in 2018. Source: CoinMarketCap

“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,” said Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office.

If convicted on all counts, Kumbhani risks facing 70 years in total in prison. The man remains at large.