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Bitconnect's Founder is Charged with a $2 Billion Crypto Fraud by a US Securities Regulator.

On Wednesday, the US Securities and Exchange Commission filed a lawsuit against the founder of the now-defunct cryptocurrency exchange platform BitConnect for allegedly defrauding retail investors out of $2 billion.

The US Securities and Exchange Commission (SEC) charged BitConnect creator Satish Kumbhani, an Indian citizen, with fraudulently advertising BitConnect's unregistered offering from January 2017 to January 2018, expanding on a civil action announced in May.

The Securities and Exchange Commission (SEC) also sued promoter Glenn Arcaro and his firm Future Money with fraud, alleging that between August 2017 and January 2018, they earned more than $24 million in "referral commissions" and "development money" while promoting BitConnect.

In a complaint filed in federal court in Manhattan, it is demanding fines, restitution of ill-gotten gains, and other relief. According to the SEC, Arcaro pleaded guilty to similar criminal charges in the United States. More information was not immediately available.

BitConnect was established in 2016 and launched BitConnect Coin, a digital token that could be exchanged for bitcoin, the most widely used cryptocurrency.

The SEC said, investors in a BitConnect "loan programme" were informed BitConnect would utilise a "volatility software trading bot" that could yield returns of 40% per month, and bogus returns showing gains of 3,700% per year were offered.

In reality, according to the SEC, BitConnect investors lost a significant amount of money as the price of BitConnect Coin dropped 92% on January 16, 2018.

Mr. Kumbhani, 35, is claimed to have lived in Surat, India, but his whereabouts are unknown, while Mr. Arcaro, 44, lives in Moorpark, California, and established Future Money in Hong Kong, according to the SEC. Mr Kumbhani could not be found despite our best efforts.

Mr Arcaro's lawyer and Future Money's counsel did not respond to demands for comment right away.

The SEC has filed a similar action against five other BitConnect promoters on May 28. It has won judgments ordering Michael Noble and Joshua Jeppesen, as well as Jeppesen's fiancee, to pay more than $3.5 million and 190 bitcoin to the organisation.

The other three promoters have either not answered to the lawsuit or have not been served, court records show.