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BitConnect Founder Indicted in $2.4B Ponzi Scheme Has Disappeared

BitConnect Founder Indicted in $2.4B Ponzi Scheme Has Disappeared

BitConnect Founder Indicted in $2.4B Ponzi Scheme Has Disappeared

Attorneys said efforts to locate Satish Kumbhani could remain unfruitful.

Attorneys said efforts to locate Satish Kumbhani could remain unfruitful.

Attorneys said efforts to locate Satish Kumbhani could remain unfruitful.

AccessTimeIconMar 1, 2022 at 8:20 a.m. UTC
Updated Mar 1, 2022 at 7:21 p.m. UTC

UPDATE (March 1, 19:50 UTC): Corrects headline and first paragraph to say that Satish Kumbhani was indicted, not convicted, regarding a Ponzi scheme.

BitConnect founder Satish Kumbhani is nowhere to be found a week after being indicted in the $2.4 billion Ponzi scheme that is said to have defrauded investors in the U.S.

Kumbhani, an Indian citizen, was charged criminally by the U.S. Department of Justice last week. The Securities and Exchange Commission separately sued Kumbhani in September 2021, claiming he fraudulently raised more than $2 billion for BitConnect.

The problem now? No one knows where Kumbhani is.

Officials said in a legal filing on Monday that Kumbhani has likely vanished from India and his whereabouts remain unknown. This follows from an October 2021 filing that said the SEC learned Kumbhani has likely relocated from India to an unknown address in a different country.

“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 senior trial counsel Richard G. Primoff in the filing.

“Since November, the Commission has been consulting with that country’s financial regulatory authorities in an attempt to locate Kumbhani’s address,” Primoff added. “At present, however, Kumbhani’s location remains unknown, and the Commission remains unable to state when its efforts to locate him will be successful, if at all.”

Primoff has asked U.S. District Judge John Koeltl for an extension until May 30.

BitConnect, founded in 2016, was one of the biggest and most popular projects in the initial coin offering (ICO) rage in mid-2017, raising billions of dollars from global investors for a protocol that purportedly paid out 10% in interest earnings via its BCC token to investors, with users who “referred” other investors getting even more benefits.

But BitConnect – which was increasingly facing scrutiny from lawmakers and investors for its product – saw platform administrators closing the earning platform on Jan. 16, 2018. Prices of BCC plummeted to below $1 from a previous high of nearly $500 in a few days after the platform’s closure.

Such conditions kick-started a court battle in the U.S. to bring to justice the founders of BitConnect, with Kumbhani and American citizen Glenn Arcaro at the center of the scheme. Arcaro pleaded guilty to criminal charges on Sept. 1, 2021, with charges including conspiracy to commit wire fraud and criminal forfeiture.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.