The alleged founder of crypto trading platform BitConnect has been inactive – leaving federal officials unable to officially serve him in a lawsuit related to a 2.4-dollar Ponzi scheme billion dollars, according to court records.
Last year, the Securities and Exchange Commission filed a lawsuit against Satish Kumbhani, a 36-year-old citizen and resident of India, for allegedly defrauding investors into funding the platform. And last week, the Justice Department indicted Kumbhani on multiple federal charges, including fraud and money laundering.
However, SEC officials do not know Kumbhani’s exact whereabouts and efforts to locate him have been unsuccessful, attorneys for the agency told a New York judge during a court hearing this week. Since BitConnect is an unincorporated entity, the SEC must personally serve the case.
The SEC learned last October that “Kumbhani has likely moved from India to an unknown address in another foreign country.” according to profile.
“Since November, the Commission has been consulting with that country’s financial regulators in an effort to locate Kumbhani’s address,” the filing adds. “However, at present, Kumbhani’s location is unknown, and the Commission has yet to say when his attempt to locate him will be successful.”
A federal judge approved the SEC’s request for a 90-day extension while the agency tries to locate Kumbhani and serve the case if he is found in the United States, Bloomberg reported. The civil lawsuit against the BitConnect founder is currently on hold while the criminal case continues.
The SEC lawsuit is trying to recover money for burned investors and fines Kumbhani and his co-conspirators.
Meanwhile, the Justice Department accused BitConnect of operating as a “textbook Ponzi scheme”.
Prosecutors said Kumbhani and his associates claimed BitConnect’s “lending program” – the program that allows investors to exchange bitcoins for the platform’s own cryptocurrency tokens – would uses “purposeful proprietary technology” that ensures returns for investors through transactions on the global cryptocurrency market.
Instead, the company’s finances have declined and it will close in 2018.
“The indictment alleges that the technologies purportedly did not, in fact, generate such profits and functioned only as a cover for the Ponzi scheme. In summary, previous BitConnect investors were paid with funds from later investors to promote the scam scheme,” the Justice Department said in a statement.
https://nypost.com/2022/03/02/bitconnect-founder-indicted-for-2-4b-ponzi-scheme-has-disappeared-sec-says/ BitConnect Founder Indicted Because $2.4 Billion Ponzi Plan Disappeared, SEC Says