News
U.S. SEC sues BitConnect founder over alleged $2 bln cryptocurrency fraud
02 Sep 2021

The top U.S. securities regulator on Wednesday sued the founder of the now-defunct cryptocurrency exchange platform BitConnect over his alleged role in fraudulently raising about $2 billion from retail investors.

Expanding a civil case announced in May, the U.S. Securities and Exchange Commission charged BitConnect founder Satish Kumbhani, an Indian citizen, with illegally touting BitConnect’s unregistered offering from January 2017 to January 2018.

It also charged the promoter Glenn Arcaro and his firm Future Money Ltd with fraud, saying they received more than $24 million in “referral commissions” and “development funds” while promoting BitConnect from August 2017 to January 2018.

The SEC is seeking fines, the recouping of ill-gotten gains, and other relief in its lawsuit in Manhattan federal court.

Founded in 2016, BitConnect created a digital token called BitConnect Coin that could be exchanged for bitcoin, the popular cryptocurrency.

The SEC said investors in a BitConnect “lending program” were told BitConnect would use a “volatility software trading bot” that could generate returns of 40% per month, and were given fictitious returns showing gains of about 3,700% per year.

In reality, the SEC said BitConnect investors lost much of their money after the price of BitConnect Coin sank 92% on Jan. 16, 2018.

The SEC said Kumbhani, 35, has lived in Surat, India, but his whereabouts are unknown, while the 44-year-old Arcaro lives in Moorpark, California, and incorporated Future Money in Hong Kong.

By Jonathan Stempel, Reuters, 1 September 2021

Read more at Reuters

RiskScreen: Eliminating Financial Crime with Smart Technology

You can claim CPD minutes for this content, by signing up to our CPD Wallet

FREE CPD Wallet