The SEC has finally filed suit against BitConnect and executives Satish Kumbhani and Glenn Arcaro.

The lawsuit follows a similar suit
filed against BitConnect’s top US promoters
in May.

As alleged by the SEC, BitConnect was a $2 billion Ponzi scheme that took in over 325,000 BTC.

Named defendants in the SEC’s lawsuit are

BitConnect – $2 billion dollar Ponzi scheme
run through a series of UK shell companies

Satish Kumbhani – Indian national who created BitConnect in 2016

Glenn Arcaro – US national and Californian resident who headed up US promotion of BitConnect

Future Money – Hong Kong shell company set up by Arcaro to launder BitConnect funds through

Kumbhani used fake names to register domain names for three BitConnect websites.

Kumbhani developed the “lending wallet,” the investor interface for the Lending Program on the BitConnect website.

He hired a neighbor to develop the BitConnect Website and implement the algorithms he had developed. Kumbhani used his own PayPal account to pay two website hosting services to BitConnect.

BitConnect advertised monthly returns of up to 40% on bitcoin investments.

The ruse behind BitConnect was that a trading bot was being used to generate external ROI revenue.

BehindMLM
reviewed BitConnect
in April 2017. We concluded there was no trading revenue being generated and that BitConnect was a Ponzi scheme.

This is in line with the SEC’s investigatory findings;

As Defendants knew or recklessly disregarded, BitConnect did not deploy investor funds for trading with its purported Trading Bot.

Rather, BitConnect and Kumbhani siphoned investors’ funds off for their own benefit, and their associates’ benefit, by transferring those funds to digital wallet addresses controlled by Kumbhani, Arcaro, other promoters, including the Arcaro Promoters, and other unknown individuals.

“Trading bots”  remain one of the most popular MLM crypto Ponzi ruses.

BehindMLM maintains that if an MLM crypto company claims to generate returns via a trading bot but can’t provide audited financial reports, it’s guaranteed to be a Ponzi scheme.

Kumbhani and BitConnect were not using investor funds to generate the trading profits represented to investors (using the Trading Bot), they also used funds received by newer investors to satisfy the withdrawal demands made by earlier investors in the Lending Program, a fact they knowingly or recklessly did not disclose to investors and prospective investors.

Kumbhani sought to conceal from the investing public that the Lending Program and BitConnect’s claims about the Trading Bot were a sham.

Kumbhani declined to provide any evidence, when asked, to corroborate the existence of the Trading Bot or how it operated

To mask the fact that they were not deploying investor funds to be traded with the purported Trading Bot they described to investors, BitConnect and Kumbhani conducted a Ponzi-like scheme in which they at times used funds deposited by newer investors in order to satisfy

🤖 Quick Answer

What was BitConnect and who were its main operators?
BitConnect was a $2 billion Ponzi scheme that collected over 325,000 BTC from approximately 325,000 investors. The scheme operated through UK shell companies and was created by Indian national Satish Kumbhani in 2016. Glenn Arcaro, a US resident, headed promotional activities in the United States and established Future Money, a Hong Kong shell company, to launder funds.

What legal actions did the SEC take against BitConnect?
The SEC filed a lawsuit against BitConnect and executives Satish Kumbhani and Glenn Arcaro. This action followed a previous suit against BitConnect's top US promoters filed in May. The defendants faced charges related to operating an unlicensed investment scheme involving fraudulent lending wallet services and systematic fund laundering through multiple jurisdictions.

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