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.”
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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.