36-year-old Indian founder charged for global crypto ponzi scheme worth $2.4 billion

Satish Kumbhani, founder of cryptocurrency platform BitConnect who has been indicted in the US for running a $2.4 billion crypto ponzi scheme, has likely "relocated from India to an unknown location" abroad. A federal grand jury in San Diego last week indicted Kumbhani with orchestrating a global Ponzi scheme. BitConnect is an alleged fraudulent cryptocurrency investment platform that reached a peak market capitalisation of $3.4 billion.

In total, Kumbhani, facing 70 years in prison if convicted, and his co-conspirators obtained approximately $2.4 billion from investors. In a latest filing in the US Securities and Exchange Commission (SEC), Senior Trial Counsel Richard Primoff said that since November, "the commission has been consulting with that country’s (India’s) financial regulatory authorities in an attempt to locate Kumbhani’s address. At present, however, Kumbhani’s location remains unknown".

Kumbhani, 36, "has likely relocated from India to an unknown address in a foreign country", Primoff said in a court filing late on Monday. While Kumbhani was charged criminally by the US Department of Justice, the SEC separately sued Kumbhani in September 2021, claiming he fraudulently raised more than $2 billion for BitConnect. Primoff has now asked US District Judge for an extension until May 30 so that the "Commission may complete its investigation into their current whereabouts and, if it locates them within the United States, serve them in a timely fashion".

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"The Commission did not know the whereabouts of Kumbhani, an Indian citizen, at the time it filed this action, and BitConnect is an unincorporated entity the Commission must serve through its manager, Kumbhani," said Primoff in the filing. According to court documents, Kumbhani misled investors about BitConnect’s "Lending Programme".  Under this programme, Kumbhani and his co-conspirators touted BitConnect`s purported proprietary technology, known as the "BitConnect Trading Bot" and "Volatility Software", as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.

The indictment further alleged that, after operating for approximately one year, Kumbhani abruptly shut down the Lending Programme. Kumbhani then directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect’s digital currency, a commodity known as BitConnect Coin (BCC), to create the false appearance of legitimate market demand for BCC.

"Kumbhani and his co-conspirators also concealed the location and control of the fraud proceeds obtained from investors by commingling, cycling, and exchanging the funds through BitConnect’s cluster of cryptocurrency wallets and various internationally based cryptocurrency exchanges," according to US Department of Justice.

"As cryptocurrency gains popularity and attracts investors worldwide, alleged fraudsters like Kumbhani are utilising increasingly complex schemes to defraud investors, oftentimes stealing millions of dollars,a said Ryan L. Korner, Special Agent in Charge, of the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office.

Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering. If convicted of all counts, he faces a maximum total penalty of 70 years in prison.

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