BitConnect Founder Indicted Over $2.4 Billion Cryptocurrency Ponzi Scheme (sandiegouniontribune.com) 31
From the Hindustan Times:
BitConnect founder Satish Kumbhani was indicted by a U.S. grand jury on charges he orchestrated a global Ponzi scheme that raised $2.4 billion from investors in a fraudulent cryptocurrency investment platform, according to a Justice Department statement.
Kumbhani, 36, was charged in San Diego with misleading investors about BitConnect's purported propriety technology... BitConnect used money from new investors to pay earlier ones and also operated as an unlicensed money transmitting business, the U.S. said.
More details from the San Diego Union-Tribune: Investors around the world, including those in San Diego, were encouraged to buy BitConnect's open-source, decentralized cryptocurrency, called BCC, using Bitcoin for the purchase. Investors would then "lend" their BCC tokens to Bitconnect, which would purportedly invest the proceeds using proprietary technology known as the Trading Bot and Volatility Software. The technology was supposedly designed to trade automatically, and profitably, by buying and selling on the volatility of Bitcoin, according to the indictment.
But much of the technology remained a mystery to investors. When someone asked for a demonstration at an event in 2017, Kumbhani was evasive: "So you ask me very hard question," he told one interviewer. He added later, "For privacy reasons we are not disclosing anything..."
Prosecutors say the investments weren't being traded as promised but were instead used to pay out earlier investors, typical of a pyramid scheme. The funds would also be used to pay BitConnect's army of promoters, who would market the investment opportunity on social media and at live events. Glenn Arcaro, described by prosecutors as "one of the most prolific and successful" of the bunch overseeing the United States, also formed his own cryptocurrency education course called Future Money. But the course was really a way to funnel potential investors to BitConnect, prosecutors said.
Arcaro, a Los Angeles resident, pleaded guilty to conspiracy to commit wire fraud in September for his role in the scheme.
After shutting down abruptly, Kumbhani then "directed his network of promoters to fraudulently manipulate and prop up the price" of BCC, "to create the false appearance of legitimate market demand..." according to a press release from the U.S. Department of Justice: 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.
More details from the San Diego Union-Tribune: Investors around the world, including those in San Diego, were encouraged to buy BitConnect's open-source, decentralized cryptocurrency, called BCC, using Bitcoin for the purchase. Investors would then "lend" their BCC tokens to Bitconnect, which would purportedly invest the proceeds using proprietary technology known as the Trading Bot and Volatility Software. The technology was supposedly designed to trade automatically, and profitably, by buying and selling on the volatility of Bitcoin, according to the indictment.
But much of the technology remained a mystery to investors. When someone asked for a demonstration at an event in 2017, Kumbhani was evasive: "So you ask me very hard question," he told one interviewer. He added later, "For privacy reasons we are not disclosing anything..."
Prosecutors say the investments weren't being traded as promised but were instead used to pay out earlier investors, typical of a pyramid scheme. The funds would also be used to pay BitConnect's army of promoters, who would market the investment opportunity on social media and at live events. Glenn Arcaro, described by prosecutors as "one of the most prolific and successful" of the bunch overseeing the United States, also formed his own cryptocurrency education course called Future Money. But the course was really a way to funnel potential investors to BitConnect, prosecutors said.
Arcaro, a Los Angeles resident, pleaded guilty to conspiracy to commit wire fraud in September for his role in the scheme.
After shutting down abruptly, Kumbhani then "directed his network of promoters to fraudulently manipulate and prop up the price" of BCC, "to create the false appearance of legitimate market demand..." according to a press release from the U.S. Department of Justice: 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.
Hey anyone remember when John Oliver covered... (Score:4, Interesting)
Re:Hey anyone remember when John Oliver covered... (Score:4, Interesting)
I certainly remember how many of us here on Slashdot have been warning about this loudly and repeatedly, only to be mocked, sometimes down-modded, and repeatedly told that we just don't understand the technology and that's why we think ill of cryptocurrencies.
Blockchain, etc., are just pieces of the "cryptocurrency" environment. Interesting possibilities for how these things could be used are not what any of us are rejecting. The harsh realities of how they actually are being used are clear: to scam innocent people out of their money.
Cryptocurrency is not some technological Robin Hood that is going to disenfranchise the wealthy and spread all that money around to the poor. And it is absolutely not a shortcut to wealth for people in need. Those who want to better themselves economically would do well to avoid this, in its current form, and focus on the tried-and-true means of earning one's keep (get an education, get a job in an in-demand field, invest your money wisely in a proper mix of stocks and bonds (AFTER you have gotten yourself educated about that too, starting with "Personal Finance for Dummies" and branching out from there)).
Re:Hey anyone remember when John Oliver covered... (Score:4, Interesting)
The problem is that anyone 'invested' in this NEEDS everyone else to really believe that it's real, or they won't be able to make their money back.
"Greater Fool" "Pyramid" "Multi Level Finance", whatever you want to call it.
For most other people the scam potential, and just plain hand waving magic bullshit is extremely obvious.
Re:Hey anyone remember when John Oliver covered... (Score:4, Interesting)
As the ponzi crashes, the "pump and dump" phase emerges. Those who are trying to cash out need suckers to buy in at inflated rates, and the only way to manage that is with a pump-and-dump cycle. Every time you see cryptocurrency ads or a rash of "whoa look crypto prices went high" - that's the pump. The dump is coming in a day or so.
And when some scampusher is telling you "it's the perfect time to buy and hodl"... yeah. They're selling. There's a con artist in the room, they're it, and you're the mark.
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So much of this. The bitpushers have been amazingly obvious in their scamming and their harvesting modpoints through sockpuppet accounts.
And of course, hearing them gloat has been just laughable. It's like hearing a MLM "lead" brag about the car they just bought, when the majority of people tricked into an MLM or other ponzi setup lose money. [ftc.gov]
(part 2 coming separately because Slashdot's shitty filters decided a list "looks too much like ascii art".
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Aside: the Slashdot ascii art filters frustrate me too sometimes. I have posted annoyance as well. But right now my head is cool and so I can say that I approve of the filters even when they block me from doing legitimate things, because I have seen the ascii art spam that plagues Slashdot and there is a lot of it. Trolls ruin everything.
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Part 2: Bitcoin and other cryptocurrencies fit the warning signs of an mlm/ponzi scam [thebalancesmb.com] perfectly.
No or Low-Quality Product or Service the only use for cryptocurrency is to try to cash it out into real money somewhere.
Outrageous and Unfounded Product Claims, the various "technological revolution" BS they're always selling.
High-Pressure Sales Tactics, Deceptive Advertising Practices, Pressure to Buy and Stock Inventory - "FOMO! You need to get in, people are getting rich! HODL!!!"
And then of course t
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The real WTF is that somebody was stupid enough to make $2,4 billion then get caught and sent to a US prison for life.
Clue: If you make $2.4 billion you buy an island somewhere and become a king, Somewhere as far from the law as possible.
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Dumb retail investors and techbros probably aren't anything to worry about; but reports are that not every criminal involved in cryptocurrency is the purely white collar sort; and at least the feds have to worry about the 8th amendment when expressing their displeasure with you.
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Thanks for the link!
I'm just waiting for NFTs to implode (Score:3)
When the idiots paying hundreds of thousands for some token that proclaims them owner of something such as digital art that has already been copied god knows how many times rendering their ownership worthless to anyone except another fool with too much money and bad taste finally wake up to reality
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There. Fixed that for ya.
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Please explain how it works.
PS: If it takes more than three sentences then it doesn't work.
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It won't. NFT is the perfect vehicle for money laundering. Hidden among those idiots that paid hundreds of thousands for NFT, a few of them were "buying" from intended recipients of bribe money.
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"Canadian peaceful protesters."
Let's see. "Peaceful protesters"... waving white-supremacist symbols [washingtonpost.com], funded by white-supremacist backers, and who engaged in calculated threats and acts of violence against people living in the area (including assaulting the people running a charity soup kitchen of all things.
I guess white supremacists are gonna lie though, they have nothing of value to offer our society.
Re: Defi and cash are protection FROM the governme (Score:2)
That's exactly the kind of justification most russian citizens (and even some ukranian) have for Putin you know ! Exact.
PS: Not talking of crypto here BTW.
There's no justification for what Canadian Govt is doing and it's pretty evident they know it themselves. You have to hold Govts to a much higher standard simply because they have extreme power and bad decisions percolating out, even after so many check n balances built in to the admin process, means someone in a powerful position must be really rotten so
Obligatory (Score:1)
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strong charges... (Score:2)
"wire fraud" and "conspiracy" are bullshit charges that shouldn't even be allowed to exist, and are only used when actual crimes would be too hard to prove.
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wire fraud /w()r frôd,fräd/
noun
financial fraud involving the use of telecommunications or information technology.
Seems pretty straightforward and not bullshit to me. Oh wait you've probable committed it haven't you.