Three weeks after the Bitfinex case, another notable case from 2016 is back on the radar of the U.S. Department of Justice (DoJ). According to the agency, one of BitConnect's founders was formally indicted on Friday (25).

The defendant is Kumbhani Satish, a 36-year-old native of India. According to the U.S. Department of Justice indictment, Satish will be responsible for, among other charges, fraud and forming a Ponzi scheme.

  • Internet fraud.
  • Commodity price fixing.
  • Operating an unlicensed money transfer business.
  • Collusion in international money laundering training.

“This indictment alleges a massive cryptocurrency scheme that resulted in more than $2.4 billion in fraud. The U.S. Attorney’s Office and our law enforcement partners are committed to bringing justice to the victims,” said Attorney Randy Grossman.

Revenue Robot

As explained by the Department of Justice, Satish defrauded an unknown number of investors to the tune of nearly $2.4 billion in trades. He created a scheme to provide trading services through robots (bots) and volatility software.

With this software, Satish claims that BitConnect users will make significant profits from the cryptocurrency. In fact, the profits are proportional to the number of new customers that investors can bring in. In this way, payments come from new users' money

In an official statement, FBI Special Agent Eric B. Smith said the BitConnect case demonstrates the scope of fraudsters' activities. In other words, it demonstrates the extent to which criminal activity can diversify its operations.

“Today’s indictment reaffirms the FBI’s commitment to identifying and solving fraudsters, and the ability of legitimate entrepreneurs to innovate in this emerging market. But transforming fraud into a ‘legitimate’ scheme and basing it overseas will not diminish the FBI’s determination and dedication to meticulously investigate these crimes.”

Bit connection case

All of the allegations relate to the BitConnect operation, one of the largest cryptocurrency scams in history. The scheme operated a lending and income platform through its token, Bitconnect Coin (BCC).

To get an idea of the extent of the fraud, BCC ranks 20th on the list of cryptocurrencies in the largest markets. BitConnect has a market capitalization of $2.5 billion, or about R$13 billion at current prices.

However, it's all a classic pyramid scam. Old customers get paid by attracting new people. The scheme lasted until 2018, when it finally collapsed. Since then, several BitConnect employees have been arrested or charged.

Since the end of the program, U.S. authorities have been searching for all those involved and seeking to save as much money as possible. In May 2021, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against five individuals associated with BitConnect.

Satish, however, was not on the SEC's list, but the agency managed to arrest the three individuals involved. Following the settlement, the defendants returned more than $12 million worth of bitcoin (BTC) and fiat currency.

As CriptoF√°cil reported, late last year, the SEC obtained a verdict against one of BitConnect's directors, Glenn Arcaro. In short, the executive pleaded guilty to the same charges that Satish now faces.