In Brief:
- The SEC charged Glenn Arcaro with fraud saying they received over $24M in “referral commission and “development funds.”
- The agency complaint, Kumbhani and Arcaro instead took 325,000 Bitcoin, valued at over $2 Billion.
- The SEC charges five other Bitconnect promoters on May 28
The U.S SEC has charged Satish Kumbhani, founder of BitConnect, and US based promoter Glenn Arcaro over his alleged role in fraudulently raising $2bn in crypto.
According to a report, the SEC charged Bitconnect founder and promoter with illegally touting BitConnect’s unregistered offering from January 2017 to 2018.
They sold $2 billion worth of its native token to retail investors. They promised investors up to 40% return on their investment via generating a non-existent “volatility software trading bot”.
The SEC charged the promoter Glenn Arcaro and his company Future Money with fraud, saying they received over $24M in “referral commissions” and “development funds.” The SEC lawsuit seeks to impose fines, recoup ill-gotten gains, and other relief.
According to the agency complaint, Kumbhani and Arcaro instead took 325,000 Bitcoin, valued at over $2 Billion. The amount transferred it into their own digital wallets as well as to unknown associates.
Kumbhani, 35, has lived in Surat, India but his whereabouts are unknown. While Arcaro, 44, lives in Moorpark, California, and incorporated Future Money in Hong Kong, authorities said.
Established in 2016, BitConnect created a digital token called BitConnect Coin that could be exchanged for bitcoin, the popular cryptocurrency.
The SEC said investors in a Bitconnect “lending program” were told Bitconnect used a “Volatility software trading bot” that could generate returns of 40% per month. Posted fictitious returns on BitConnect Website that amounted on average 1% per day, or approximately 3,700% on an annualised basis.
The SEC said Bitconnect investors lost much of their money after the price of BitConnect Coin sank 92% on Jan 16, 2018. Prosecutors said BitConnect ran a “Ponzi like scheme” by paying earlier investors with new investor money.
“We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets,” SEC Associate Regional Director Lara Mehraban said in a statement. Adding that, the agency will “aggressively pursue and hold accountable those who engage in misconduct in the digital asset space.”
The SEC charged five other Bitconnect promoters on May 28. It has obtained Judgements requiring two promoters Michael Noble and Joshua Jeppesen, and Jeppesen’s finance to pay over $3.5 million. The other three promoters have not responded to the lawsuit or have not been served.
