- The court filing accuses Kumbhani and his team of misleading investors into a BitConnect Lending Programme.
- The BitConnect founder also faces charges of manipulating the price of native crypto BitConnect Coin (BCC).
The BitConnect episode has recently rocked the crypto market after details of running a $2.4 billion crypto Ponzi scheme emerged. As per the latest information, BitConnect founder Satish Kumbhani has been on the run and has likely “relocated from India to an unknown location” abroad.
Last week, the federal grand jury in San Diego accused Kumbhani of running a Ponzi scheme. It said that BitConnect was an alleged fraudulent investment platform that reached a peak market cap of $3.4 billion. So if Kumbhani stands convicted, he might have to spend 70 years in prison.
In one of the latest filings, the U.S. Securities and Exchange Commission (SEC) Senior Trial Counsel Richard Primoff said that since last November 2021, “the commission has been consulting with that country’s (India’s) financial regulatory authorities in an attempt to locate Kumbhani’s address. At present, however, Kumbhani’s location remains unknown”.
In a court filing late Monday, Primoff further added that Kumbhani has “has likely relocated from India to an unknown address in a foreign country”. Kumbhani is already facing criminal charges from the US Department of Justice. But the U.S. SEC has also filed a separate lawsuit against the BitConnect founder for fraudulently raising over $2 billion.
Now, Primoff has requested the U.S. District Court Judge for an extension until May 30. In the filing, he added:
Commission may complete its investigation into their current whereabouts and, if it locates them within the United States, serve them in a timely fashion. The Commission did not know the whereabouts of Kumbhani, an Indian citizen, at the time it filed this action, and BitConnect is an unincorporated entity the Commission must serve through its manager, Kumbhani.
BitConnect’s misleading lending program
The court documents reveal that Kumbhai misled his investors via BitConnect’s “Lending Programme”. Under this scheme, Kumbhani and his team misled investors by promising high profits and guaranteed returns using the “BitConnect Trading Bot” and “Volatility Software”.
The indictment also states that for operating for nearly a year, BitConnect abruptly shut down the Lending Programme. Furthermore, Kumbhani also asked his network of promoters to manipulate and pump the price of BitConnect’s native crypto aka BitConnect Coin (BCC). In the filing, the U.S. Justice Department notes:
Kumbhani and his co-conspirators also 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 internationally based cryptocurrency exchanges.
Kumbhani has been accused of conspiracy to commit wire fraud and commodity price manipulation. Besides, he also faces charges of operating an unlicensed money transmitting business and committing international money laundering.