News of cryptocurrency investment fraud has hit the community again, as authorities of two U.S. states, Illinois and Arizona, have asked the Criminal Investigation Department (CID) in India to seize the property of several BitConnect promoters, per reports from the Times of India.
BitConnect was an open-source cryptocurrency and an investment program accused of running a Ponzi scheme before ceasing operations in January of this year.
The CID crime investigators assigned to the case reported that they have since learned that the alleged suspects, Satish Kumbhani and Divyesh Darji, two local promoters of BitConnect, began their cryptocurrency-based investment in Dec. 2016, following demonetization, and successfully lured in many investors by promising an unrealistic 365% return per annum on investments.
The investors were made to exchange their bitcoins with BitConnect coins, which they were told could yield interest. Bhatt has also been implicated in the case.
It was confirmed as a scam when the team shut down the BCC crypto exchange and investing platform after being served a cease and desist letter from Texas regulators, declaring an ICO shortly beforehand as a last ditch effort to squeeze more money out of users before exit scamming with the millions already invested.
A CID crime investigator also reported that:
“At the time, one BitConnect coin was worth about $360, and people invested their Bitcoins due to the attractive returns promised. While Darji was arrested from the Delhi airport on his way back from Dubai, Kumbhani is still absconding.”
The U.S. states of Illinois and Arizona are now asking the investigating authorities in India to seize the property of the promoters who defrauded investors of Rs 41,000 crore (around $5.6 billion). Most of the funds were purportedly poured into the firm after the demonetization of high-value banknotes at the direction of the Modi administration in 2014.
The CID also claims that some of the investors are “suspected of laundering black money” and they would be probed by the enforcement directorate and income tax authorities.
Following the sudden cessation of activities on the platform, many investors have found it difficult to redeem or trade their BitConnect holdings. American users have also launched a class action lawsuit against the company, which alleges that the BitConnect tokens were not registered securities and are now seeking compensation for lost funds.
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Last modified: May 20, 2020 6:00 PM UTC