Satish Kumbhani, the founder of BitConnect, has disappeared from his native India after being charged criminally in the United States by the SEC with a $2.4 billion Ponzi scheme, according to officials with knowledge on the matter.
Kumbhani had been sued by the Securities and Exchange Commission that claimed that the BitConnect founder had fraudulently raised over $2 billion from investors in this crypto exchange platform. However, the SEC could not trace his whereabouts to actually serve him the notice.
Has Kumbhani Relocated?
Kumbhani’s whereabouts came into question on Monday when Richard Primoff, the attorney for the Securities and Exchange Commission, stated in a court filing that the BitConnect founder had most likely relocated from India to an unknown address in a different country.
“Since November, the commission has been consulting with that country’s financial regulatory authorities in an attempt to locate Kumbhani’s address. At present, however, Kumbhani’s location remains unknown.”
The SEC asked the US District Judge, John Koeltl, for an extension until the 30th of May so that it can attempt to locate Kumbhani and, if he is found to be in the United States, serve him with the notice.
A Massive Ponzi Scheme
If Kumbhani is found to be in the United States or attempts to enter the country, he could be arrested and potentially be sent to prison if convicted of the charges brought against him by the SEC. According to prosecutors, Kumbhani created BitConnect in 2016 and the BitConnect coin. Kumbhani stated that BitConnect’s lending program was based on proprietary volatility software, and trading bots would trade on global crypto markets.
However, the lending program turned out to be a massive Ponzi scheme that enabled Kumbhani to raise $2.4 billion from investors before it shut down in 2018. The shutdown sent alarm bells ringing, with Kumbahni’s promoters based in several countries asking for help in dealing with investors who had invested almost everything they had in the scheme.
An Array Of Charges Against Kumbhani
BitConnect was not generating any profits, with the company using money from new investors to pay those that had invested in the company earlier. Accordingly, Kumbhani faces a host of charges, including wire fraud, operating an unlicensed money transmitting business, conspiracy to commit wire fraud, conspiracy to commit commodity price manipulation, and conspiracy to commit international money laundering.
Earlier, the company’s top promoter in the United States, Glenn Arcaro, pleaded guilty to charges. Prosecutors also stated that they would be selling off $57 million in crypto seized from Arcaro.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
