Pune Police have launched a probe into an alleged multi crore cryptocurrency fraud and have booked Satish Kumbhani, the founder of cryptocurrency investment platform BitConnect, who has earlier been indicted in a US court for orchestrating an international Ponzi scheme worth $2.4 billion and is now being investigated by the Federal Bureau of Investigation (FBI).
A First Information Report in the case has been registered at the Cyber Police station of Pune City Police on Tuesday night by a Pune based lawyer who has told the police that he lost close to 220 bitcoins — equivalent to over Rs 42 crores as on Wednesday — through multiple cryptocurrency investment platforms. In his FIR, the lawyer has named Kumbhani (36) and six others.
The FIR states that the complainant was defrauded of his original investment of 54 bitcoins and the returns of 166 bitcoins, which he allegedly made to reinvest into the platforms. The transactions between the complainant and the suspects have taken place between 2016 and June 2021. No arrests have been made in the case and a search for the suspects has been launched. Officials said that they will also probe whether the same set of suspects have cheated any more people in the same manner.
Police officials said that according to their preliminary inquiries, Kumbhani, an Indian National and founder of BitConnect was in February indicted of $2.4 billion cryptocurrency scam.
Senior Inspector DS Hake, from the Cyber Crime Police Station of Pune police said that the case was registered on Tuesday night and a probe has been launched into the details provided by the complainant.
A press statement on February 25 this year from the Department of Justice of USA on Kumbhani’s indictment says, “A federal grand jury in San Diego returned an indictment today charging the founder of BitConnect with orchestrating a global Ponzi scheme. BitConnect is an alleged fraudulent cryptocurrency investment platform that reached a peak market capitalization of $3.4 billion.”
The release adds, “According to court documents, Satish Kumbhani, 36, of Hemal, India, the founder of BitConnect, misled investors about BitConnect’s “Lending Program.” Under this program, Kumbhani and his co-conspirators touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets. As alleged in the indictment, however, BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors.”
The FBI Cleveland Field Office and Internal Revenue Service-Criminal Investigation are investigating the case, the release said.
The release says, “Kumbhani is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering. If convicted of all counts, he faces a maximum total penalty of 70 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Kumbhani is at large.”
