BitConnect co-founder wanted in India, faces mega scam probe anew

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Police in India’s southwest city of Pune have launched an investigation against BitConnect co-founder Satish Kumbhani, who is now wanted in his home country following a complaint from an investor about a missing BTC investment.

According to a report by local news outlet the Indian Express, the investor, who is also a lawyer, said he lost nearly 220 bitcoins (worth around $5.2 million) through multiple investment platforms operated by the Kumbhani and six others between 2016 and 2021. This amount includes his initial investment of 54 bitcoins and reinvestment of 166 bitcoins earned as returns.

The complaint led to the filing of the First Information Report (FIR), which meant that the case would now be under investigation. The investigators will also look to identify other victims while a search for the perpetrators has begun.

Kumbhani founded the now defunct BitConnect protocol in 2016 and operated it until 2018, when it closed for being a Ponzi scheme. While in operation, it purportedly paid out 10% in interest earnings via its BCC token. It also had a referral scheme that consumers used to earn more rewards.

According to U.S. authorities, the platform fraudulently raised $2.4 billion from misled investors. In February of this year, Kumbhani was indicted by the Department of Justice on charges of wire fraud, conspiracy to commit commodity price manipulation, and international money laundering. He will face up to 70 years of jail time if found guilty of all the charges.

Scams continue to damage the digital assets industry’s reputation

Authorities have been unable to locate him since his indictment with the Securities and Exchange Commission (SEC), noting his last known location was in his native India. Previously, the SEC reached settlements with some of the U.S.-based promoters of BitConnect. 

The BitConnect case, one of the biggest to rock the market, is not the only scam that has remained unresolved from the initial coin offering or ICO era. European authorities have also been increasing their search for Ruja Ignatova, the founder of OneCoin, a digital asset scam that defrauded investors of over $4 billion.

The Federal Bureau of Investigation also has a warrant out for Ignatova’s arrest and has added her to its top 10 most wanted individuals list with a bounty of $100,000. She was last seen in 2017.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.