BitConnect Founder Investigated For Losing 220 Bitcoin

According to a report by the Indian Express, the country’s authorities have launched an investigation against Satish Kumbhani for his alleged involvement in the fraud of 220 Bitcoin (BTC) to one person. Kumbhani is the founder of BitConnect, found guilty by US courts of supporting a worldwide Ponzi scheme worth $ 2.4 billion.

Now, Indian authorities are investigating Kumbhani and six suspects following a complaint from a citizen. The complainant and the suspects were involved in several transactions over a 5-year period.

The complainant made an investment of 54 Bitcoin (BTC) as an original investment in a project that promised him a return of 166 BTC. Legal documents filed with Indian authorities claim that Kumbhani and the other suspect defrauded the complainant of the total amount, approximately 220 Bitcoins.

The complaint was filed on Tuesday and, as a result, the country’s authorities began looking for more information on the extent of the alleged scam and the whereabouts of the suspects. The investigation was unsuccessful at the time of writing.

In addition to the investigation by the Indian authorities, as mentioned, Kumbhani was accused in the United States of conspiracy to commit computer fraud, computer fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmission business and conspiracy to commit international money laundering.

However, Kumbhani remains a fugitive and could face up to 70 years in prison if caught and extradited to the United States. To date, the Federal Bureau of Investigation (FBI) and Internal Revenue Service (IRS) Criminal Investigation are examining BitConnect-related activities and the millions of dollars defrauded by victims in Bitcoin and cryptocurrencies.

In a press release from the United States Department of Justice:

A federal grand jury in San Diego returned an indictment today accusing the BitConnect founder of orchestrating a global Ponzi scheme. BitConnect is an alleged fraudulent cryptocurrency investment platform that has peaked in market capitalization of $ 3.4 billion.

Bitcoin BTC BTCUSDT
BTC price with slight losses on the 4-hour chart. Source: BTCUSDT Tradingview

Bitcoin and cryptocurrency scams see a decline in 2022

BitConnect attracted victims by promising returns from their “BitConnect Trading Bot” and their “Volatility Software”. The scheme used its clients ‘funds to generate profits, pay off early investors, and then steal the laggards’ capital. The statement from the Department of Justice added:

the founder of BitConnect, misled investors about BitConnect’s “Loan Program”. (…) the “BitConnect Trading Bot” and the “Volatility Software”, as they can generate substantial profits and guaranteed returns by using investor money to trade on the volatility of the cryptocurrency exchange markets. As stated in the indictment, however, BitConnect operated like a Ponzi scheme.

As reported by Bitcoinist, chain company Chainalysis recorded a 60% increase in cryptographic hacks during the first seven months of 2022. The bad guys managed to take around $ 2 billion from several cyber attacks targeting the industry.

However, cryptocurrency scams have seen a massive decrease over the same period of time. In the first half of 2021, crypto scams made over $ 4 billion compared to $ 1.6 billion this year, which is a 65% decrease. Chainalysis said:

Since January 2022, scam revenues have declined more or less in line with Bitcoin prices. As asset prices drop, cryptocurrency scams, which typically present themselves as passive cryptocurrency investment opportunities with huge promised returns, are less appealing to potential victims.

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