US regulator sued the founder of BitConnect for illegally raising over $2B from investors in a scheme not registered with the SEC, according to a report by Bloomberg on Wednesday.
- The SEC sued founder Satish Kumbhani, 35, and Glenn Arcaro, a promoter, for improperly selling securities linked to the company’s purported “lending program” for around a year starting in Jan. 2017.
- BitConnect falsely informed investors that it could earn monthly returns of nearly 40% with its proprietary “volatility software trading bot” when no such strategy existed.
- SEC regulator sued five BitConnect promoters in May for their roles in enhancing the scheme by forming testimonials on YouTube.
- BitConnect closed its exchange in January 2018 after obtaining two cease-and-desist letters from state authorities from unauthorized sale of securities and suffering from denial-of-service attacks.
The SEC has been raising concerns over initial coin offerings for years, arguing the sales are likely securities that must comply with federal rules. BCC USD up +0.77%