According to a report by Indian Express, the authorities of the country started an investigation against Satish Kumbhani for his alleged participation in defrauding a person out of 220 Bitcoin (BTC). Kumbhani is the founder of BitConnect, found guilty by US courts of supporting a worldwide Ponzi scheme worth $2.4 billion.
Now Indian authorities are investigating Kumbhani and six suspects following a complaint filed by a citizen. The complainant and the suspects were involved in several transactions over the course of 5 years.
The complainant made an investment of 54 Bitcoin (BTC) as an original investment in a project that promised him a return of 166 BTC. The legal documents filed with the Indian authorities allege that Kumbhani and the other suspect defrauded the complainant of the total amount, around 220 Bitcoin.
The complaint was filed last Tuesday, and as a result, authorities in the country began searching for more information about the extent of the alleged fraud and the whereabouts of the suspects. At the time of writing, the investigation has been fruitless.
In addition to the investigation by Indian authorities, Kumbhani was charged in the United States with conspiracy to commit wire fraud, conspiracy to commit commodity price manipulation, operating an unlicensed money transfer business, and conspiracy to commit international money laundering.
However, Kumbhani remains at large and could face up to 70 years in prison if captured and extradited to the United States. To this day, the US Federal Bureau of Investigation (FBI) and Internal Revenue Service (IRS) Criminal Investigation are looking into the activities related to BitConnect and the millions of dollars defrauded from victims in Bitcoin and cryptocurrencies.
According to a press release from the US Department of Justice:
A federal grand jury in San Diego today returned an indictment charging the founder of BitConnect with orchestrating a global Ponzi scheme. BitConnect is an allegedly fraudulent cryptocurrency investment platform that reached a peak market cap of $3.4 billion.
Bitcoin and Crypto Scams See Decline in 2022
BitConnect attracted victims by promising returns from their “BitConnect Trading Bot” and their “Volatility Software”. The scheme used customers’ funds to generate profits, pay early investors and then steal the capital of late adopters. The Justice Department release added:
the founder of BitConnect, misled investors about BitConnect’s “lending program”. (…) “BitConnect Trading Bot” and “Volatility Software”, as being able to generate significant profits and guaranteed returns by using investors’ money to trade on the volatility of the cryptocurrency exchange markets. However, as alleged in the indictment, BitConnect operated as a Ponzi scheme.
As Bitcoinist reported, on-chain company Chainalysis recorded a 60% increase in crypto hacks in the first seven months of 2022. Bad actors managed to take around $2 billion from various cyberattacks targeting the sector.
However, crypto fraud has seen a massive decline in the same time period. In the first half of 2021, crypto fraud yielded over $4 billion compared to this year’s $1.6 billion representing a 65% decrease. Chainalysis said:
Since January 2022, fraud revenue has more or less fallen in line with Bitcoin prices. When asset prices fall, cryptocurrency scams – which typically present themselves as passive crypto investment opportunities with huge promised returns – are less tempting to potential victims.