SEC is Suing Bitconnect Founder for $2 Billion Fraud [u]

Remember Bitconnect? If you do, well, it was fun while it lasted. If you need a reminder,  just watch this video below.

BitConnect is emblematic of the pomposity and absolutely ridiculous heyday of the initial coin offering boom and ensuing bust. The whole thing collapsed in a scrum of lawsuits, allegations of securities fraud, Ponzi scams, and lost money. Occasionally, Bitconnect resurfaces, usually in regards to a lawsuit, and today Bloomberg is reporting that BitConnect founder Satish Kumbhani is being sued by the Securities and Exchange Commission (SEC). Kumbhani is apparently being joined by Glenn Arcaro, a promoter tied to the saga. Both are said to be the target of a complaint filed in US District Court for “selling securities tied to the company’s purported lending program.”

According to the report, “BitConnect falsely told investors that it could generate monthly returns as high as 40% with its proprietary “volatility software trading bot” when no such strategy existed.”

The SEC’s complaint alleges that Kumbhani and his lieutenant defrauded retail investors for about $2 billion.

Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office, issued the following statement:

“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.”

Just last month, the SEC won a victory in US District Court in a judgment against Michael Noble (aks Michael Crypto) and a final judgment against Joshua Jeppesen for their involvement with BitConnect and the promotion of its lending program.

The SEC’s complaint charged Noble with violating the registration provisions of the federal securities laws, and Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities.

Without admitting or denying the SEC’s allegations, Noble consented to the entry of a judgment and Jeppesen consented to the entry of a final judgment.  The final judgment against Jeppesen ordered him to pay $3,039,485 in disgorgement and prejudgment interest, 190 Bitcoin in disgorgement, and a $150,000 penalty, and to turn over information and access to a Bitcoin wallet to satisfy his obligation to pay the 190 Bitcoin in disgorgement.

The judgment against Noble orders him to pay disgorgement, prejudgment interest and a civil penalty in an amount to be determined by the court at a later date upon the Commission’s motion. The final judgment against Mascola orders her to pay $576,358 in disgorgement and prejudgment interest.

Sometimes the courts move slowly but in the case of BitConnect, and some other ICO ploys, the movement is more like a steamroller that inevitably flattens everything in front of it.

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