Sep 02, 2021 13:15:00

BitConnect, a virtual currency lender that claims ``3700% annual return'', is sued for fraud

On September 1, 2021,

the U.S. Securities and Exchange Commission filed a lawsuit in the U.S. District Court for the Southern District of New York, accusing virtual currency lending platform BitConnect of defrauding investors of $2 billion (approximately 220 billion yen). Ta.

SEC.gov | SEC Charges Global Crypto Lending Platform and Top Executives in $2 Billion Fraud
https://www.sec.gov/news/press-release/2021-172

US SEC charges BitConnect founder with $2 bln cryptocurrency fraud | Reuters

https://www.reuters.com/technology/us-sec-sues-bitconnect-founder-over-alleged-2-bln-cryptocurrency-fraud-2021-09-01/

According to the complaint filed in court, BitConnect solicited unregistered securities from investors in the form of a 'lending program.' At that time, BitConnect claimed to ``provide an annual return of 3,700% using proprietary trading software.'' However, the U.S. Securities and Exchange Commission claims that BitConnect's founder Satish Kumbhani, promoter Glenn Arcaro, and others are actually spending the funds on promotional activities for top promoters, which constitutes fraud.

Then, on January 16, 2018, BitConnect announced the closure of the platform. As a result, the price of the issued virtual currency ``BitConnect Coin'' fell 92% from its peak, and many investors lost their assets.

Prior to this lawsuit, the U.S. Securities and Exchange Commission had indicted Mr. Arcaro for fraudulently receiving more than $24 million (approximately 2.6 billion yen) from BitConnect in the name of 'referral fees.' Mr. Arcaro has pleaded guilty and is scheduled to be sentenced on November 15, 2021. The U.S. Securities and Exchange Commission has filed suit against other promoters involved in BitConnect as well.

The U.S. Securities and Exchange Commission said, 'BitConnect capitalized on the interest in cryptocurrencies of retail investors around the world. We aggressively pursue those who engage in fraudulent activity in the crypto space.' Ta.