BitConnect Founder Indicted by Justice Department Disappears

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SEC officials do not know the whereabouts of Satish Kumbhani, the founder of crypto trading platform BitConnect, who last week was with $2.4 billion fraudulent investors in a Ponzi scheme. This puts the SEC in a bind, as it must serve the 36-year-old entrepreneur with his court documents. In a Monday, the SEC said it did not have an address for Kumbhani, an Indian citizen, and suspected he had likely fled to another country.

The DOJ charges Kumbhani with a number of offenses including conspiracy to commit wire fraud, conspiracy to manipulate commodity prices and conspiracy to commit international money laundering.

“Kumbhani’s location remains unknown, and the Commission remains unable to say when, if at all, its efforts to locate him will be successful,” the SEC wrote in its filing.

To save time, the SEC is asking the U.S. District Court for the Southern District of New York for a 90-day extension. Since BitConnect is an unincorporated entity and not a formal company, all court documents must be served on Kumbhani himself.

Founded in 2016, BitConnect gained a lot of attention on social media for its “lending program” which allowed users to lend their Bitcoin in exchange for a proprietary Bitconnect cryptocurrency. The program claimed it could guarantee returns by using investors’ money to trade volatility in the cryptocurrency markets.”

“As part of this program, Kumbhani and his co-conspirators touted BitConnect’s alleged proprietary technology, known as the ‘BitConnect Trading Bot’ and ‘Volatility Software’, as capable of generating substantial profits and returns. secured by using investors’ money to trade on the volatility of cryptocurrency exchange markets.As alleged in the indictment, however, BitConnect operated as a Ponzi scheme by paying former BitConnect investors with money from subsequent investors,” the DOJ Office of Public Affairs wrote in a .

After years of crypto existing in one place, US government officials are cracking down on cryptocurrency fraud and scams at an increasing rate. Last year, the DOJ launched a National Cryptocurrency Enforcement Team to handle complex cryptocurrency and recently appointed a veteran cybersecurity prosecutor as director.

BitConnect is just one of many cryptocurrency schemes that law enforcement has come up with in recent months. The founders of BitMex, a crypto derivatives exchange, circumvented anti-money laundering laws in the United States and were ordered to pay $20 million in fines. Earlier this month, DOJ Ilya Lichtenstein and Heather Morgan, two entrepreneurs who allegedly tried to launder more than 25,000 bitcoins stolen in the 2016 Bitfinex hack.

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