BitConnect founder Satish Kumbhani, 35, and promoter Glenn Arcaro, 44, are accused of breaking US fraud laws in a civil lawsuit brought this week by the SEC in New York City.
All investors had to do was hand over their Bitcoin, or rather, lend BitConnect the cryptocurrency, and the biz’s bot would use it to make trades and bank huge profits to return to the investors as interest payments. Instead, the SEC claimed, the digital money was funneled into electronic wallets owned by Kumbhani, Arcaro, and others for their own personal benefit.
A total of 325,000 Bitcoins, at the time worth about $2bn and today $16bn, was given to Kumbhani and BitConnect, the SEC claims. We’re told Arcaro was hired to promote the scheme; he started his own company Future Money to entice people into trading with BitConnect and was paid commission fees every time he successfully got someone to join the lending program.
Arcaro is due to be sentenced for wire fraud on November 15 in California. Kumbhani’s current whereabouts, however, are unknown.
The SEC lawsuit seeks to impose fines, recoup ill-gotten gains, and other relief. Kumbhani, 35, has lived in Surat, India but his whereabouts are unknown, while Arcaro, 44, lives in Los Angeles and incorporated Future Money in Hong Kong, authorities said.
It is not known if there is a warrant out for Kumbhani. Usually when someone runs off with $2 billion or so there is usually a somebody wanting their pound of flesh. Recall the Turkish Faruk Fatih Özer who has an Interpol red notice warrant after stealing a vast amount of money.