SEC Sues Bitconnect And Its Top Executives In $2 Billion Fraud

BitConnect was a cryptocurrency lending platform. Which was viewed by many, including the SEC as a Ponzi scheme. On Wednesday, the Securities and exchange commission of United States (SEC) sued BitConnect founder for allegedly stealing approximately $2 billion from retail investors.

The SEC brought up a civil case in May. It accused BitConnect founder Satish Kumbhani, an Indian citizen of illegally advertising BitConnect’s unregistered offerings between January 2017 to January 2018.

Glenn Arcaro, and his Future Money Ltd were also accused of fraud. SEC claim that they received more than $24,000,000 in referral fees while promoting BitConnect between August 2017 to January 2018.

In SEC federal suit in Manhattan, the SEC seeks to recover retailers lost income.

SEC Writes in their official release:

“According to the SEC’s complaint, filed in the United States District Court for the Southern District of New York, from early 2017 through January 2018, Defendants conducted a fraudulent and unregistered offering and sale of securities in the form of investments in a “Lending Program” offered by BitConnect.

The complaint alleges that, to induce investors to deposit funds into the purported Lending Program, Defendants falsely represented, among other things, that BitConnect would deploy its purportedly proprietary “volatility software trading bot” that, using investors’ deposits, would generate exorbitantly high returns. However, the SEC alleges that instead of deploying investor funds for trading with the purported trading bot, defendants BitConnect and Kumbhani siphoned investors’ funds off for their own benefit by transferring those funds to digital wallet addresses controlled by them, their top promoter in the U.S., defendant Glenn Arcaro, and others.

We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets. We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space.”

BitConnect was launched in 2016 and claimed to be a cryptocurrency-based lending platform. At that time Bitconnect collected 325,000 bitcoins worth $ 2Billion (now over $ 15 Billion). SEC has asked the US District Court for Southern District of New York for an order requiring the defendants to return all money and pay a civil penalty.

BitConnect was foced to shut down its lending platform in January 2018 when North Carolina and Texas securities regulators issued termination orders for Bitconnect services.

After shutting down operations BitConnect claimed that their token (BCC) would still be available on crypto exchanges and users funds would be transferred from credit wallets to users BCC wallets at $363.62 per BCC. This was an average 15-day closing price. After the announcement BCC price suddenly dropped from $425 to $29 in hours and people lost millions.

Previously SEC charged U.S.-based Trevon Brown (a.k.a. Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (a.k.a. Michael Crypto) for promoting Bitconnect.