SEC files lawsuit against BitConnect over role in $2B crypto fraud

The US Securities and Exchange Commission on Wednesday sued Satish Khumbhani, the founder of now-defunct cryptocurrency Ponzi scheme BitConnect, over his alleged role in the $2 billion cryptocurrency scam that shook the crypto world.

In a press release issued by the agency, the regulatory authority called BitConnect “a global fraudulent and unregistered offering of investments into a program involving digital assets.”

Khumbhani was the top U.S. promoter of the company, which eventually saw over $2 billion in total taken from investors via a program that BitConnect purported would offer high returns.

The SEC is accusing Khumbhani and others of siphoning investors’ funds to digital wallets for their own benefit.  The finance watchdog went on to state that it was a large collective exploit as BitConnect established a large network of promoters around the world.

Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office, said,

We allege that these defendants stole billions of dollars from retail investors around the world by exploiting their interest in digital assets. We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space.

The SEC is looking to compose findings, recover some of the funds, among other things. Meanwhile, the whereabouts of Khumbhani remains unknown.

The market was been heavily affected by the incident, and it has encouraged due diligence on the part of exchanges and investors. However, it has not stopped cryptocurrency scams from occurring.

BTC PEERS reported that decentralized e-commerce platform Bondly Finance allegedly pulled an exit scam sometime in July.

Due to incidents like this, regulators are proceeding to make investor protection a high priority.