Off the radar: Indicted BitConnect founder Satish Kumbhani disappears

03/04/2022 / By Ramon Tomey

The founder of a cryptocurrency company linked to a billion-dollar Ponzi scheme is nowhere to be found. Satish Kumbhani reportedly disappeared following his indictment over an alleged $2.4 billion Ponzi scheme.

The Securities and Exchange Commission (SEC) acknowledged the BitConnect founder’s disappearance in a Feb. 28 filing. Senior trial counsel Richard G. Primoff wrote in the filing that the SEC “did not know the whereabouts of Kumbhani, an Indian citizen, at the time it filed this action.” He added that “at present, Kumbhani’s location remains unknown and that the [SEC] remains unable to state when its efforts to locate him will be successful, if at all.”

“In October 2021, the [SEC] learned that Kumbhani has likely relocated from India to an unknown address in a different foreign country. Since November [2021], the [SEC] has been consulting with [Indian] financial regulatory authorities in an attempt to locate Kumbhani’s address.”

A federal grand jury in San Francisco indicted the 36-year-old Kumbhani on Feb. 25, according to the Department of Justice (DOJ). Court documents stated that the BitConnect founder, who hails from Hemal in the westernmost Indian state of Gujarat, is “orchestrating a global Ponzi scheme.”

Kumbhani and his co-conspirators were accused of misleading investors through BitConnect’s Lending Program that promised “substantial profits and guaranteed returns” by using investors’ money to trade in crypto exchange markets. “However, BitConnect operated as a Ponzi scheme by paying earlier investors with money from later investors,” said the DOJ.

Established in 2016, BitConnect managed to raise billions of dollars from investors around the globe by promising a 10 percent interest through its BitConnect Coin (BCC) token. But after approximately one year of operation, Kumbhani shut down the BitConnect Lending program. (Related: BitConnect shuts down after accusations it was running a cryptocurrency Ponzi scheme.)

The DOJ said he and his collaborators fleeced approximately $2.4 billion from investors. Kumbhani faces a maximum penalty of 70 years in prison if convicted.

Scams abound in the crypto world

The scheme involving Kumbhani and BitConnect is not the first time investors were swindled into shelling out their money as part of a scam. Back in April 2021, many small investors in the United States were fleeced of their hard-earned crypto tokens stored in their digital wallets because of the ElonFarms crypto scam.

The Epoch Times reported that hundreds of crypto investors lost their money in their digital wallets after they approved token purchase transactions. According to the victims, the perpetrators misled investors into allowing access to their entire wallet – enabling the scammers to steal the funds.

ElonFarms investors initially thought they approved a contract for purchasing the digital tokens. However, they later discovered that the contract also allowed ElonFarms – and the scammers behind it – to access their entire digital wallet. The investors lost all assets kept in their digital wallets, with the total number of victims unclear.

One victim who called himself “Mr. Ray” said all he saw on his end was a prompt to approve the transfer fee to receive $300 of crypto tokens. But he received no tokens and ended up with an empty digital wallet, losing $6,000 in assets. “I just couldn’t believe it. I have come to terms with the loss, [but] I hope those responsible for hurting so many people get their fair shares,” he said.

Another victim who called himself “Mr. Crypto” invested an initial $100 in one of the crypto mining farms linked to the ElonFarms token. He accepted the contract and confirmed the payment, expecting to receive interest for his initial cash out. It was only days later that he found that more than $60,000 in his digital wallet was transferred to another wallet.

“That’s when I knew I was scammed. I don’t care so much about getting my money back as catching [the scammers] and putting them in jail,” he told the Epoch Times.