The US Securities and Exchange Commission (SEC) has filed charges against now-defunct online crypto lending platform BitConnect alleging it defrauded retail investors out of $2 billion.
The regulator is also targeting founder Satish Kumbhani, US promoter Glenn Arcaro, and his affiliated company.
BitConnect is alleged to have conducted a “global” fraudulent and unregistered offering and sale of securities in the form of investments in its lending platform.
According to the SEC’s complaint, filed in the United States District Court for the Southern District of New York, these charges relate to a period from early 2017 through January 2018.
The SEC alleges that instead of deploying investor funds for trading with a purported “volatility software trading bot”, defendants BitConnect and Kumbhani siphoned investors’ funds into digital wallets controlled by them, Arcaro and others.
The defendants are charged with violating antifraud and registration provisions of federal securities laws. The complaint seeks injunctive relief, disgorgement plus interest and civil penalties.
The SEC’s investigation was assisted by a collection of other financial supervisory bodies, including the Cayman Islands Monetary Authority, the Hong Kong Securities and Futures Commission, and the Monetary Authority of Singapore.