The U.S. states of Illinois and Arizona are asking India’s Criminal Investigation Department (CID) to sequester the property of promoters of the now notorious fraudulent Bitcoin investment scam, BitConnect, as the Times of India reported September 11.
Closed as of January 2018, BitConnect was an open-source cryptocurrency and decentralized platform that has long been suspected of being a Ponzi scheme largely on account of its multi-level referral system and high-yield investment program, the hallmark of the most common types of fraud.
As detailed in the report, the two U.S. states are imploring India’s CID to confiscate the property of BitConnect promoters who have purportedly defrauded investors over Rs 41,000 crore equivalent to roughly $5.6 billion. According to the CID, the funds were reportedly siphoned into the firm, coinciding with the Modi government’s mandate ordering the demonetization of high-value banknotes in 2016.
As the CID stressed, “those who invested in this virtual currency company after demonetization are suspected of laundering black money.” As such, the agency indicated that it will be coordinating with the enforcement directorate and income tax authorities to investigate these investors.
News of the alleged Ponzi scheme initially hit headlines back in April after businessman Shailesh Bhatt filed a complaint against 11 people for allegedly abducting him and extorting $1.2 million worth of Bitcoin out of him. However, as it would later turn out, Bhatt, who initially claimed to be a victim, was himself a financial fraudster.
As the CID stated:
“The investigation found that Bhatt had invested Rs 2 crore ($275,000) in BitConnect and after the company shut shop in January 2017, he kidnapped an employee of BitConnect, Dhaval Mavani, and extorted Bitcoins, Litecoins and cash worth Rs 155 crore ($25 million) from him.”
The CID investigation has since led to the arrest of Divyesh Darji, the alleged head of BitConnect’s Asia operation. In cooperation with the immigration department, the Gujarat CID officers were able to track down Darji in August during one of his travels from Dubai to Delhi.
According to the CID, the staff at the BitConnect office in Surat had confessed that promoters of the scam had defrauded “crores [tens of millions] of rupees from thousands of investors.”
Following BitConnect’s termination of its operation, a number of U.S.-based users have since filed a class action suit against the firm and is reportedly seeking $771,000 in damages. As cited in the charges, BitConnect’s digital assets are unregistered securities in a “wide-ranging Ponzi scheme.”
With the authorities’ crackdown against the perpetrators behind BitConnect and the last remaining digital currency exchange trading BitConnect tokens now delisting the company from its platform, it would appear that one of the most notorious exit scams has finally reached its end.