BitConnect’s Indicted Founder Satish Kumbhani Has Disappeared, Says Report

The Securities and Exchange Commission last September had sued Kumbhani, claiming he fraudulently raised more than $2 billion from investors in his cryptocurrency exchange platform

US prosecutors said Satish Kumbhani created BitConnect in 2016 and the digital token, BitConnect Coin. Image: Getty

New Delhi: Satish Kumbhani, founder of BitConnect, who has been indicted on charges of orchestrating a global ponzi scheme worth $2.4 billion, has vanished from India, according to a report in Bloomberg.

The Securities and Exchange Commission last September had sued Kumbhani, claiming he fraudulently raised more than $2 billion from investors in his cryptocurrency exchange platform. But the SEC didn't know where he was and couldn't serve him with the lawsuit. 

The mystery deepened a bit on Monday. SEC Attorney Richard Primoff said in a court filing that Kumbhani (36), “has likely relocated from India to an unknown address in a foreign country. Since November, the commission has been consulting with that country’s financial regulatory authorities in an attempt to locate Kumbhani's address. At present, however, Kumbhani's location remains unknown.”

Primoff asked US District Judge John Koeltl for an extension until May 30. The SEC said it wants to look for Kumbhani and if it finds him in the US, serve him with the complaint.

Kumbhani is charged with conspiracy to commit wire fraud and price manipulation, operation of an unlicensed money transmitting business and conspiracy to commit international money laundering. If convicted of all counts, he faces a maximum total penalty of 70 years in prison.

According to court documents, Kumbhani of Hemal in Gujarat misled investors about BitConnect’s “Lending Program.” BitConnect reached a peak market capitalisation of $3.4 billion, the Department of Justice said.

US prosecutors said Kumbhani created BitConnect in 2016 and the digital token, BitConnect Coin.

In reality, the lending programme was a massive Ponzi scheme that raised $2.4 billion from investors around the world before shutting down in January 2018, prosecutors said.

BitConnect used money from new investors to pay earlier ones, the US said. He is charged with wire fraud, operating an unlicensed money transmitting business, and three conspiracies: to commit wire fraud; commodity price manipulation; and international money laundering.

Last September, BitConnect's top promoter in North America, Glenn Arcaro, pleaded guilty. In November, prosecutors said they would sell about $57 million in cryptocurrency seized from Arcaro. This month, a judge approved an amended order for the sale.

The indictment of Kumbhani seeks to forfeit $2.4 billion attributable to his actions.