ED seizes ₹1,646 crore in cryptos, cash, SUV in BitConnect scam raids

The police had booked Satish Kumbhani, founder and owner of BitConnect – a cryptocurrency investment platform – in August 2022 in connection with the multi-crore scam

Ahmedabad: Cryptocurrencies worth ₹1,646 crore were seized in Ahmedabad on Saturday by the enforcement directorate (ED) in connection with BitConnect cryptocurrency scam, which targeted investors worldwide, including in India, police said.

The probe revealed that from November 2016 to January 2018, Kumbhani and his associates ran a fraudulent, unregistered investment scheme under the US-based firm BitConnect’s Lending Program, luring investors with high returns (REUTERS)

The probe agency has also seized ₹13.50 lakh in cash, an SUV and several digital devices after it raidedmultiple locations across in Gujarat, said an officer.

The ED’s investigation, under the provisions of the Prevention of Money-Laundering Act, 2002, was based on FIRs registeredin 2018 by the CID (Crime) police station, Surat.

The police had booked Satish Kumbhani, founder and owner of BitConnect – a cryptocurrency investment platform – in August 2022 in connection with the multi-crore scam.

The agency deployed a team of tech-savvy experts who examined the “complex web” of transactions carried out across “numerous” crypto wallets to identify the origin and controllers of these wallets. It was found that many transactions were conducted through the “dark web” to make them untraceable, police said.

The probe revealed that from November 2016 to January 2018, Kumbhani and his associates ran a fraudulent, unregistered investment scheme under the US-based firm BitConnect’s Lending Program, luring investors with high returns through a supposed “volatility software trading bot.”

Kumbhani and his associates promised Investors up to 40% monthly profits by depositing Bitcoin (BTC), which was then converted into BitConnect’s own cryptocurrency (BCC). The platform also included a referral system, where users earned commissions for bringing in new investors, making it function like a multi-level marketing (MLM) scam. Investors were asked to deposit funds in both cash and Bitcoin, with fake returns – showing annualized earnings of 3,700% – displayed on the BitConnect website.

However, investigations revealed that no such trading took place. Instead, investor funds were siphoned off and moved into digital wallets controlled by Kumbhani and his associates. They used money from new investors to pay old ones – a classic Ponzi scheme.

The platform collapsed in January 2018 after financial regulators issued cease and desist orders, leaving investors with huge losses.

Earlier, the ED in Ahmedabad had attached ₹489 crore worth of movable and immovable properties in connection with the BitConnect cryptocurrency scam.

Officials said foreign nationals also “invested” in BitConnect and the “main accused” is under probe by federal authorities in the US.