BitConnect founder Satish Kumbhani, charged criminally in the U.S. last week with a $2.4 billion Ponzi scheme, has vanished from his native India, officials said.
Last September, the Securities and Exchange Commission separately sued Kumbhani, claiming he fraudulently raised more than $2 billion from investors in his cryptocurrency exchange platform. But the SEC didn’t know where he was and couldn’t serve him with the lawsuit.
Kumbhani managed to convince investors to contribute to the company’s lending program, which he said involved proprietary technology called “BitConnect Trading Bot” and “Volatility Software.” Kumbhani falsely told investors that he could guarantee profits by using investor funds to trade cryptocurrency based on the volatility of the market. After a year, Kumbhani shut down the Lending Program but figured out a way to manipulate the price of BitConnect Coin (BCC) so that it looked to still be successful. At its peak, BitConnect Coin was trading at $463.31.
“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion,” said US Attorney Randy Grossman. “The US Attorney’s Office and our law enforcement partners are committed to pursuing justice for victims of cryptocurrency fraud.”
The regulator claimed that in 2017 and 2018, the five promoted and sold securities through the BitConnect lending program, which promised investors returns as high as 40%. Marketing consisted of YouTube content, social media, and “testimonials.” The promoters each earned between $475,000 and $1.3 million in commission.
US national Joshua Jeppesen was also charged as an alleged liaison between BitConnect and the platform’s promoters, earning himself a reported $2.6 million in the process.