In the year 2017, the trading price of Bitconnect (BCC) reached an all-time high of $463.31. According to the Department of Justice, its peak market capitalization reached $3.4 billion. However, the prices declined over the next few months, causing huge losses to investors.
Kumbhani, who hails from Gujarat, had allegedly promised investors “to generate substantial profits and guaranteed returns” under Bitconnect’s ‘borrowing programme’. and continued the scheme, thus defrauding billions of dollars through a Ponzi scheme.
The Department of Justice also says that Kumbhani and his associates created fake market demand for Bitconnect by manipulating the market. The investments received were hidden and transferred through Bitconnect’s cryptocurrency wallets and cryptocurrency exchanges.
It is worth noting that in September last year, the former promoter of Bitconnect ‘Glenn Arcaro’ has been convicted in the same case. He is accused of involvement in the Bitconnect fraud.
At the same time, the Department of Justice has also alleged that Kumbhani did not register with the Financial Crimes Enforcement Network (FinCEN) and violated US regulations. Overall, Kumbhani has been charged with conspiracy, manipulating commodity prices, operating an unlicensed money transmitting business and conspiracy to commit international money laundering.
The matter is currently being investigated by the FBI Cleveland Field Office and the IRS Criminal Investigation (CI). If convicted on all counts, Kumbhani could face a maximum jail term of 70 years.
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