One of the reasons that the adoption of BTC and crypto is failing to take off is the fear of fraud. Other reasons being volatility and a general lack of understanding of the space.
Cases like the $2.4 billion ponzi scheme floated by Bitconnect founder Satish Kumbhani do not help the case for crypto adoption. The US DoJ indicted Kumbhani for fraud. However, the authorities have been unable to trace Kumbhani thus far.
In a recent filing in the court, the SEC admitted that they were not aware of Kumbhani’s location. The last they were able to trace his location was in India.
SEC suspects that he has left India too. SEC remains skeptical of its ability to trace him and also did not want to put a time frame for his arrest.
Kumbhani has been charged on several serious counts of financial malfeasance/conspiracies. These relate to wire fraud, international money laundering, and also commodity price manipulation.
The fraud dates back to 2016. The project offered investors a 10% return on its BCC token. The project then, in 2016, created quite a sensation.
Kumbhani has been charged by the DoJ of defrauding American investors by running a Ponzi scheme. Owing to hype generated, BCC’s value rose to $463.31 at the end of 2017. Its market cap then, was estimated to be around $3.4 billion. However, a little later in January 2018, the price crashed to near zero – causing a massive loss to investors.
The project succeeded using the same method that all ponzi schemes use. Create a hype, use the initial money received to pay off old investors and then just disappear with the money.