This case was last updated from U.S. District Courts on 01/09/2023 at 23:30:19 (UTC).

Securities and Exchange Commission v. BitConnect et al

Case Summary

On September 1, 2021, the Securities and Exchange Commission (“SEC”), represented by Richard G. Primoff and Richard R. Best, attorneys at the SEC’s New York regional office, filed a civil enforcement action against BitConnect (“BitConnect”), Satish Kumbhani (“Kumbhani”), Glenn Arcaro (“Arcaro”), and Future Money Ltd. (“Future Money”) (collectively, “Defendants”), seeking injunctive relief, disgorgement of all ill gotten gains together with civil monetary penalties for allegedly conducting fraudulent and unregistered offering and sale of securities in the form of investments in BitConnect’s purported “Lending Program,”. This case was filed in U.S District Court in the Southern District of New York. 

In its complaint, the SEC alleged that, “From approximately January 2017 to January 2018 (the “relevant period”), Defendants conducted a fraudulent and unregistered offering and sale of securities in the form of investments in BitConnect’s purported “Lending Program,” that ultimately succeeded in obtaining more than 325,000 Bitcoin, or approximately $2 billion, from investors worldwide, including from investors located in the United States.”

The SEC further alleged that, “BitConnect, an unincorporated organization, and Kumbhani, its founder, established a worldwide network of promoters, and rewarded them for their promotional efforts by paying them commissions, a substantial portion of which they concealed from investors. Among these promoters was Arcaro, whom Kumbhani and BitConnect engaged as the lead national promoter of BitConnect for the United States, and who used the website he created for his company, Future Money, to lure investors into the Lending Program.”

The SEC also alleged that, “To induce investors to deposit funds into the purported Lending Program, BitConnect and Kumbhani represented, among other things, that BitConnect would deploy a purported proprietary “volatility software trading bot” (the “Trading Bot”) that, they claimed, would use investor funds to generate returns as high as 40% per month, and they posted fictitious returns on the BitConnect Website that amounted to, on average, 1% per day, or approximately 3,700% on an annualized basis.”

The SEC even further alleged that, “To mask the fact that they were not deploying investor funds to be traded with the purported Trading Bot they described to investors, BitConnect and Kumbhani conducted a Ponzi-like scheme in which they at times used funds deposited by newer investors in order to satisfy withdrawal demands made by earlier investors.”

The SEC has laid down five claims for relief, the first claim is against all Defendants for alleged Violations of Exchange Act Section 10(b) and Rule 10b-5, the second claim is against BitConnect, Kumbhani and Arcaro for alleged Violations of Securities Act Section 17(a), the third claim is against Future Money for alleged Violations of Securities Act Section 17(a)(1) and (3), the fourth claim is against all Defendants for alleged Violations Securities Act Sections 5(a) and (c) and the last claim is against Arcaro and Future Money for alleged Violations of Exchange Act Section 15(a). 

In its prayer for relief, the SEC requested that the Court permanently enjoin Defendants from violating the alleged provisions; permanently enjoin Arcaro and Future Money from violating the alleged provisions; permanently prohibit Future Money from offering, operating, or participating in any marketing or sales program in which the participant is compensated; order Defendants to disgorge all ill-gotten gains and/or unjust enrichment they received directly or indirectly, with pre-judgment interest thereon; and order Defendants to pay civil monetary penalties. 

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-07349

  • Filing Date:

    09/01/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Presiding Judge

John G. Koeltl

 

Party Details

Plaintiff

Securities and Exchange Commission

Defendants

BitConnect

Satish Kumbhani

Intervenor

Trial Attorney U.S. Department Of Justice

Attorney/Law Firm Details

Plaintiff Attorneys

Richard G Primoff

Attorney at U.S. Securities and Exchange Commission

100 Pearl Street, Suite 20-100

New York, NY 10004-2616

John O'Donnell Enright

Attorney at DOJ-USAO

271 Cadman Plaza East

Brooklyn, NY 11201

Richard R. Best

Attorney at U.S. Securities and Exchange Commission

200 Vesey Street, Ste 400

New York, NY 10281

Intervenor Attorney

Kevin Lowell

Attorney at DOJ-Crm

1400 New York Avenue

Washington, DC 20005

 

Court Documents

#35

(#35) MEMO ENDORSEMENT on re: #34 Status Report filed by Securities and Exchange Commission. ENDORSEMENT: Application granted and the SEC should provide another status update by 3/3/23. SO ORDERED. (Signed by Judge John G. Koeltl on 11/25/2022) (jca) (Entered: 11/28/2022)

#34

(#34) STATUS REPORT. Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 11/23/2022)

#33

(#33) MEMO ENDORSEMENT on re: #32 Status Report filed by Securities and Exchange Commission, ENDORSEMENT: Application granted. SO ORDERED (Signed by Judge John G. Koeltl on 8/25/2022) ( Service due by 11/30/2022.) (ks) (Entered: 08/25/2022)

#32

(#32) STATUS REPORT. Status Report on Efforts to Serve Kumbhani and BitConnect and Request for Additional Time to Serve Defendants Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 08/24/2022)

#31

(#31) MEMO ENDORSEMENT: on re: #30 Status Report filed by Securities and Exchange Commission. ENDORSEMENT: Application Granted. SO ORDERED., ( Service due by 8/28/2022.) (Signed by Judge John G. Koeltl on 5/26/2022) (ama) (Entered: 05/26/2022)

#30

(#30) STATUS REPORT. Status Report on Efforts to Serve Defendants Kumbhani and BitConnect and Request for Extension of Time to Complete Service Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 05/25/2022)

#29

(#29) MEMO ENDORSEMENT on re: #28 Status Report filed by Securities and Exchange Commission, ENDORSEMENT: Application granted. The stay is modified to allow service of process on defendants Kumbhani and Bitmex and the time to serve (if applicable) is extended to 5/30/22. So Ordered. (Signed by Judge John G. Koeltl on 3/1/2022) ( Service due by 5/30/2022.) (ks) (Entered: 03/01/2022)

#28

(#28) STATUS REPORT. Plaintiff SEC's Status Report on Service on Defendants Kumbhani and BitConnect and Request For Extension of Time to Serve Defendants Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 02/28/2022)

#27

(#27) ORDER granting #23 Motion to Intervene; granting #23 Motion to Stay re: #23 MOTION to Intervene . MOTION to Stay . And there being no opposition, HEREBY ORDERS THAT: Pending resolution of the criminal matter captioned United States v. Glenn Arcaro, 21-CR-2542-TWR (S.D. Cal., Sept. 1, 2021), and the conclusion of the criminal investigation, the Civil Case proceedings are stayed and the Securities and Exchange Commission, defendants BitConnect, Satish Kumbhani, Glenn Arcaro, and Future Money Ltd., will not seek discovery in the Civil Case from one another or from third parties. IT IS SO ORDERED.. (Signed by Judge John G. Koeltl on 12/15/2021) (ks) (Entered: 12/15/2021)

23 #2

Text of Proposed Order

23 #1

Memorandum in Support

#7

#6

#5

#4

#3

#2

#1

29 More Documents Available
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Docket Entries

  • 11/28/2022
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  • Docket(#35) MEMO ENDORSEMENT on re: #34 Status Report filed by Securities and Exchange Commission. ENDORSEMENT: Application granted and the SEC should provide another status update by 3/3/23. SO ORDERED. (Signed by Judge John G. Koeltl on 11/25/2022) (jca) (Entered: 11/28/2022)

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  • 11/23/2022
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  • Docket(#34) STATUS REPORT. Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 11/23/2022)

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  • 08/25/2022
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  • Docket(#33) MEMO ENDORSEMENT on re: #32 Status Report filed by Securities and Exchange Commission, ENDORSEMENT: Application granted. SO ORDERED (Signed by Judge John G. Koeltl on 8/25/2022) ( Service due by 11/30/2022.) (ks) (Entered: 08/25/2022)

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  • 08/24/2022
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  • Docket(#32) STATUS REPORT. Status Report on Efforts to Serve Kumbhani and BitConnect and Request for Additional Time to Serve Defendants Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 08/24/2022)

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  • 05/26/2022
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  • Docket(#31) MEMO ENDORSEMENT: on re: #30 Status Report filed by Securities and Exchange Commission. ENDORSEMENT: Application Granted. SO ORDERED., ( Service due by 8/28/2022.) (Signed by Judge John G. Koeltl on 5/26/2022) (ama) (Entered: 05/26/2022)

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  • 05/25/2022
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  • Docket(#30) STATUS REPORT. Status Report on Efforts to Serve Defendants Kumbhani and BitConnect and Request for Extension of Time to Complete Service Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 05/25/2022)

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  • 03/01/2022
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  • Docket(#29) MEMO ENDORSEMENT on re: #28 Status Report filed by Securities and Exchange Commission, ENDORSEMENT: Application granted. The stay is modified to allow service of process on defendants Kumbhani and Bitmex and the time to serve (if applicable) is extended to 5/30/22. So Ordered. (Signed by Judge John G. Koeltl on 3/1/2022) ( Service due by 5/30/2022.) (ks) (Entered: 03/01/2022)

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  • 02/28/2022
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  • Docket(#28) STATUS REPORT. Plaintiff SEC's Status Report on Service on Defendants Kumbhani and BitConnect and Request For Extension of Time to Serve Defendants Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 02/28/2022)

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  • 12/15/2021
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  • Docket(#27) ORDER granting #23 Motion to Intervene; granting #23 Motion to Stay re: #23 MOTION to Intervene . MOTION to Stay . And there being no opposition, HEREBY ORDERS THAT: Pending resolution of the criminal matter captioned United States v. Glenn Arcaro, 21-CR-2542-TWR (S.D. Cal., Sept. 1, 2021), and the conclusion of the criminal investigation, the Civil Case proceedings are stayed and the Securities and Exchange Commission, defendants BitConnect, Satish Kumbhani, Glenn Arcaro, and Future Money Ltd., will not seek discovery in the Civil Case from one another or from third parties. IT IS SO ORDERED.. (Signed by Judge John G. Koeltl on 12/15/2021) (ks) (Entered: 12/15/2021)

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  • 12/03/2021
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  • Docket(#26) JUDGMENT AS TO DEFENDANT FUTURE MONEY LTD.: IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating Section 5 of the Securities Act of 1933 ("Securities Act") (15 U.S.C. 77e] by, directly or indirectly, in the absence of any applicable exemption: As further set forth in this order. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant shall comply with all of the undertakings and agreements set forth therein. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment. There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the Clerk is ordered to enter this Judgment forthwith and without further notice. (Signed by Judge John G. Koeltl on 12/3/2021) Future Money Ltd. terminated. (ks) (Entered: 12/03/2021)

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24 More Docket Entries
  • 09/02/2021
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  • Docket(#7) ELECTRONIC SUMMONS ISSUED as to Future Money Ltd.. (vf) (Entered: 09/02/2021)

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  • 09/02/2021

  • DocketCASE REFERRED TO Judge John G. Koeltl as possibly related to 1:21cv4791. (vf) (Entered: 09/02/2021)

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  • 09/02/2021

  • DocketCase Designated ECF. (vf) (Entered: 09/02/2021)

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  • 09/02/2021

  • DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge Unassigned. (vf) (Entered: 09/02/2021)

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  • 09/01/2021
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  • Docket(#6) REQUEST FOR ISSUANCE OF SUMMONS as to Future Money Ltd., re: #1 Complaint. Document filed by Securities and Exchange Commission..(Primoff, Richard) (Entered: 09/01/2021)

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  • 09/01/2021
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  • Docket(#5) FILING ERROR - DEFICIENT- SUMMONS REQUEST - REQUEST FOR ISSUANCE OF SUMMONS as to Glenn Arcaro, re: #1 Complaint. Document filed by Securities and Exchange Commission..(Primoff, Richard) Modified on 9/2/2021 (vf). (Entered: 09/01/2021)

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  • 09/01/2021
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  • Docket(#4) NOTICE OF APPEARANCE by Richard G Primoff on behalf of Securities and Exchange Commission..(Primoff, Richard) (Entered: 09/01/2021)

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  • 09/01/2021
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  • Docket(#3) RELATED CASE AFFIRMATION of Richard R. Best re: that this action be filed as related to 21-4791. Document filed by Securities and Exchange Commission..(Best, Richard) (Entered: 09/01/2021)

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  • 09/01/2021
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  • Docket(#2) CIVIL COVER SHEET filed..(Best, Richard) (Entered: 09/01/2021)

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  • 09/01/2021
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  • Docket(#1) COMPLAINT against Glenn Arcaro, BitConnect, Future Money Ltd., Satish Kumbhani. Document filed by Securities and Exchange Commission..(Best, Richard) (Entered: 09/01/2021)

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