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SEC Sues BitConnect Founder on Fraud Charges
The securities regulator also filed charges against a U.S.-based promoter and an affiliated company.
The U.S. Securities and Exchange Commission (SEC) filed charges against BitConnect and its founder, Satish Kumbhani, as well as a U.S.-based promoter, Glenn Arcaro, alleging fraud against the crypto lending company.
The SEC accused BitConnect, a global operation that used a network of commission-based promoters to sell $2 billion worth of its native cryptocurrency token to retail investors, of being a Ponzi scheme. Investors were promised up to 40% return on their investment, which BitConnect promised to generate using a non-existent “volatility software trading bot.”
STORY CONTINUES BELOW
Instead of investing client funds, the SEC alleges BitConnect and Kumbhani “siphoned investors’ funds off for their own benefit by transferring those funds to digital wallet addresses controlled by them, their top promoter in the U.S., defendant Glenn Arcaro, and others.”
Several other BitConnect promoters have already faced civil lawsuits from the SEC for receiving millions in commission for their role in the alleged fraud.
Kumbhani and Arcaro had not, until today, been charged for their relationship to BitConnect’s alleged scam.
BitConnect operated between 2016 and 2018, shutting down after receiving cease-and-desist orders from state regulators, including Texas and North Carolina. At the time, the letters alleged BitConnect was violating state securities laws.
The company’s BCC token tanked in price following the shutdown.
UPDATE (Sept. 1, 21:20 UTC): Adds additional context.
Cheyenne Ligon
On the news team at CoinDesk, Cheyenne focuses on crypto regulation and crime. Cheyenne is originally from Houston, Texas. She studied political science at Tulane University in Louisiana. In December 2021, she graduated from CUNY's Craig Newmark Graduate School of Journalism, where she focused on business and economics reporting. She has no significant crypto holdings.
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