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Indian Crypto Founder Accused of $2.4 Billion Fraud

BitConnect was a crypto fraud scheme that operated as an exchange.

On Friday, the United States Department of Justice announced that a federal grand jury charged BitConnect founder Satish Kumbhani, of Surat in India, with cheating investors of around $2.4 billion through its lending scheme.

Kumbhani was charged with conspiracy to commit wire fraud, conspiracy to commit price manipulation, operating an unlicensed money transmitter and conspiracy to launder funds internationally for orchestrating a global crypto Ponzi scheme in the guise of BitConnect, according to a press release by the Department of Justice.

If convicted of all these offences, Kumbhani will be serving 70 years in prison.

“This indictment alleges a massive cryptocurrency scheme that defrauded investors of more than $2 billion,” said U.S. Attorney Randy Grossman. “The U.S. Attorney’s Office and our law enforcement partners are committed to pursuing justice for victims of cryptocurrency fraud.”

The modus operandi was BitConnect solicited investors to use its “Lending Program,” “BitConnect Trading Bot” and “Volatility Software,” all of which would generate substantial profits and guaranteed returns.

In reality, it was a Ponzi scheme that paid earlier BitConnect investors with money from later investors’ money.

The global crypto industry is fraught with crimes because of its regulatory uncertainty and unawareness. Investors need to Do Their Own Research or Do Your Own Research (DYOR) before investing in any offering. Since crypto is unregulated in most countries, one cannot find any licensed investment adviser. So, it is prudent to take a cautious approach.

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