Satish Company, founder of cryptocurrency exchange BitConnect, has been accused of misleading and defrauding global investors of $2.4 billion in the process.
According to the Department of Justice (DOJ), a federal grand jury in San Diego specifically accused the company of masterminding an alleged Ponzi scheme via BitConnect’s “lending program”:
“BitConnect acted as a Ponzi scheme by paying former BitConnect investors money from subsequent investors. In total, Kompany and his accomplices raised about $2.4 billion from investors.”
BitConnect (BCC) price history. Source: CoinMarketCap
Back in 2017, amid the hype, BitConnect (BCC) reached an all-time high of $463.31 in trading, which according to the Department of Justice reached a peak market capitalization of $3.4 billion. However, as the above chart shows, prices collapsed rapidly within a few months, resulting in huge losses for investors.
The company, which is based in Gujarat, India, allegedly promised investors “big profits and guaranteed returns” under BitConnect’s lending program. “The indictment alleges that Kompany used money from new investors to partially pay off old investors until the program was abruptly halted — running a Ponzi scheme book.
The Department of Justice further stated that Kompany and its associates falsified market demand for BCC through market manipulation. The resulting investment was allegedly hidden and moved across “BitConnect’s portfolio of cryptocurrency wallets and several international crypto exchanges.”
In support of the Department of Justice’s allegations, in September 2021, former BitConnect promoter Glenn Arcaro pleaded guilty to allegations of fraud related to his role in the now-defunct crypto-lending platform.
The indictment also alleges that Kompany evaded US regulations by not registering with the Financial Crimes Enforcement Network (FinCEN), as required under the Bank Secrecy Act.
The Justice Department said in a statement that Kompany is charged with conspiracy to commit electronic fraud, conspiracy to commit commodity price manipulation, operating unauthorized money laundering and conspiracy to commit international money laundering.
The case is currently being investigated by the Cleveland FBI and Criminal Investigation (CI). If Kompany is convicted on all charges, he will be subject to a maximum sentence of 70 years in prison. In addition, the Department of Justice recommends that all BitConnect investors register as potential victims.
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As Cointelegraph reported, the lawsuit alleges that SafeMoon and its affiliates imitated real Ponzi schemes by misleading investors to buy SafeMoon tokens on the pretext of unrealistic profits.
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