SEC Sued BitConnect and Founder Kumbhani over $2 Billion Cryptocurrency Fraud

SEC Order unregistered ICO

The U.S. Securities and Exchange Commission (SEC) sued BitConnect for allegedly committing a massive cryptocurrency fraud that harmed investors worldwide.

According to the SEC, the lawsuit included BitConnect’s founder Satish Kumbhani, its primary U.S. promoter Glenn Arcaro and his firm Future Money Ltd.

In the complaint, the Commission alleged that the defendants defrauded approximately $2 billion from investors in the United States and overseas.

This is not the first lawsuit filed against BitConnect. In fact, its legal troubles in the U.S. started in 2018 when the securities regulators of Texas and North Carolina issued cease-and-desist orders. The state regulators alleged that it was selling an unregistered cryptocurrency called Bitconnectx to investors. Thus, its initial coin offering (ICO) was fraudulent. The state regulators’ enforcement action prompted the online cryptocurrency lending platform to shut down its operations.

BitConnect and Khumbhani run a Ponzi-like scheme

In the SEC complaint, the federal securities regulator alleged that BitConnect, Kumbhani, Arcaro, and Future Money conducted fraudulent and unregistered securities offering through investments in a Lending Program.