The indictment was revealed today, it involves the founder of the defunct crypto-currency platform Bitconnect. According to the indictment, Mr. Kumbhani and his relatives allegedly obtained about $2.4 billion from investors. He is currently on the run.
The charges against the accused are numerous. According to court documents, the 36-year-old allegedly misled investors about the crypto “lending program” offered by BitConnect. The team also allegedly touted the proposed cryptocurrency trading tools as capable of generating huge profits while guaranteeing returns to each user.
In reality, BitConnect was based on a Ponzi scheme in that the first investors were paid with the money of the second. You know the rest of the story.
It was only after a year of operation that Kumbhani abruptly decided to close the lending program. He then instructed several promoters of the project to fraudulently manipulate and prop up the BitConnect Coin (BCC) crypto price in order to maintain the appearance of legitimate demand – despite the sudden closure of the program.
Also according to the indictment, the fraudulent company conveniently avoided U.S. financial regulations, including those enforced by the Financial Crimes Enforcement Network (FinCEN).
“Crime, particularly digital currency crime, continues to transcend international borders,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The department is committed to protecting victims, preserving market integrity, and strengthening our global partnerships to hold criminals engaged in crypto-currency fraud accountable. We thank our partners around the world for their ongoing efforts.”
The FBI also commented on this story, believing it to be part of a broader anti-fraud effort in which cryptos and bitcoin are allegedly involved. Special Agent in Charge Eric B. Smith believes that “Dressing up a proven fraud scheme with a new twist and setting it up overseas will not deter the FBI’s determination and dedication to meticulously investigate and bring these fraudsters to justice.”
In total, the founder is charged with conspiracy to commit “wire” fraud, conspiracy to manipulate the price of the BCC token, operating a money transfer business and attempted international money laundering.
If convicted on all of these counts, he faces a maximum sentence of 70 years in prison. However, he is presumed innocent until proven guilty by a U.S. judge.
Source : https://www.justice.gov/opa/pr/bitconnect-founder-indicted-global-24-billion-cryptocurrency-scheme