The U.S. Securities and Exchange Commission (SEC) filed charges against BitConnect and its founder Satish Kumbhani, as well as a U.S.-based promoter, Glenn Arcaro, alleging fraud against the crypto lending company.
The SEC accused BitConnect, a global operation that used a network of commission-based promoters to sell $2 billion worth of its native cryptocurrency token to retail investors, of being a Ponzi scheme. Investors were promised up to 40% return on their investment, which BitConnect promised to generate using a non-existent “volatility software trading bot.”
Instead of investing client funds, the SEC alleges that BitConnect and Kumbhani “siphoned investors funds off for their own benefit by transferring those funds to digital wallet addresses controlled by them, their top promoter in the U.S., defendant Glenn Arcaro, and others.”
Several other BitConnect promoters have already faced civil lawsuits from the SEC for receiving millions in commission for their role in the alleged fraud.
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