Satish Kumbhani, indicted in $2.4B Ponzi scheme has disappeared

The indicted founder of crypto trading platform BitConnect has gone off the grid – leaving federal officials unable to formally serve him with a lawsuit in connection to an alleged $2.4 billion Ponzi scheme, according to a court filing.

The Securities and Exchange Commission filed suit last year against Satish Kumbhani, a 36-year-old citizen and resident of India, for allegedly bilking investors into funding the platform. And last week, the Justice Department indicted Kumbhani on various federal charges, including fraud and money laundering.

But SEC officials did not know Kumbhani’s exact whereabouts and attempts to find him have been unsuccessful, attorneys for the agency told a New York judge in a court filing this week. Since BitConnect is an unincorporated entity, the SEC has to personally serve him with the lawsuit.

The SEC learned last October that “Kumbhani has likely relocated from India to an unknown address in a different foreign country,” according to the filing.

“Since November, the Commission has been consulting with that country’s financial regulatory authorities in an attempt to locate Kumbhani’s address,” the filing added. “At present, however, Kumbhani’s location remains unknown, and the Commission remains unable to state when its efforts to locate him will be successful, if at all.”

The federal judge granted the SEC’s request for a 90-day extension while the agency attempts to locate Kumbhani and serve him with the lawsuit if he is found within the US, Bloomberg reported. The civil lawsuit against the BitConnect founder is currently on hold while the criminal case proceeds.

The SEC’s lawsuit is attempting to recover money for burned investors and impose fines on Kumbhani and his co-conspirators.

Meanwhile, the Justice Department alleges BitConnect operated as a “textbook Ponzi scheme.”

Prosecutors say Kumbhani and his associates claimed BitConnect’s “lending program” – which had investors exchange bitcoin for the platform’s own crypto token – would use “purported proprietary technology” that would guarantee investors profits through trades in the global cryptocurrency market.

Instead, the company’s finances tanked and it shut down for good in 2018.

“The indictment alleges that in reality, the purported technologies generated no such profits, and merely functioned as a cover for the Ponzi scheme. In sum, earlier BitConnect investors were paid with money from later investors to promote the fraudulent scheme,” the Justice Department said in a release.