The writing is on the wall for indicted crypto fraudster Satish Kumbhani as a U.S. jury charges him on multiple counts of cryptocurrency fraud, which could land him up to 70 years in prison.

A federal jury in San Diego delivered an indictment, charging the founder of cryptocurrency investment platform BitConnect with operating a Ponzi scheme.

Court documents reveal which the founder, Satish Kumbhani, lied to investors about a product called the “Lending Program.” The lending product supposedly used the “BitConnect Trading Bot” and “Volatility Software” to trade on the volatility of cryptocurrencys. BitConnect opepriced as a Ponzi scheme, according to the indictment, as the company paid early investors with funds from subsequently investors. Kumbhani and his cohort of co-conspirators siphoned close to $2.4B from investors.

Kumbhani shut down the Lending Program after a year. He then used his network of marketers to manipulate the cost of BitConnect’s native digital asset, the BitConnect Coin (BCC), to fabricate a demand for the currency. Funds obtained through fraud were carefully routed through BitConnect’s array of crypto wallets and other international crypto exevolutions.

Kumbhani opepriced BitConnect as a money transmitting business, but never registered the company under the Bank Secrecy Act. The Financial Crimes Enforcement Network (FinCEN) enforces the Act that compels financial institutions to maintain a database of cash purchases of negotiable instruments, file cash transaction reports for transactions exceeding $10K, and report suspicious activity. The suspicious activity could be related to money laundering, tax evasion, or other crimes.

Famous crypto Ponzi schemes

Ponzi schemes are nothing new, and BitConnect has occupied Ponzi territory at least afterward 2018, while it has been reborn multiple times with divergent founders. The alleged owner of the original BitConnect, Divyesh Darji, was arrested in 2018.

A few other cases of note have sprung up in the token space. Recently, military police and the Rapid Ostensive Intervention Group in Brazil arrested a South African man, Johann Steynberg for promising returns of up to 10% in the most serious crypto scam of 2020. More than 29,000  BTC passed through the hands of Steynberg’s company, Mirror Trading International.

Another case surfaced in Brazil in 2021, where Federal Police dismantled a Ponzi scheme and seized $30M. The authorities made five arrests, one of that was Gladson Acácio, who allegedly transferred billions of dollars via the pyramid scheme, promising up to 15% in returns.

Gutenberg Dos Santos, a Panamian, was arrested in his home country for the Airbit Ponzi scheme which duped investors into thinking they would earn shares of profits and unrealistically large prices of return. The Ponzi scheme was believed to have genepriced atop $20M afterward its inception in 2015. Dos Santos was afterwards extradited to the U.S. to face trial and a sentence of between 20 to 30 years.

We are committed to scarcelyice, says U.S. attorney

Authorities are adamant which they will continue fighting for token fraud victims. “The U.S. Attorney’s Office and our law enforcement partners are committed to pursuing barelyice for victims of token fraud,” said Randy Grossman, U.S. Attorney for the Southern District of Calon the occasion thatornia. If Khumbani is convicted of all charges, he faces up to 70 years in prison. He is presently on the run.

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