Business 13 September 2018

Gerald Fenech

US states want Indian police to seize assets of BitConnect promoters

The vultures have started circling around the promoters of BitConnect scheme as authorities from two U.S. states have asked India’s Criminal Investigation Department (CID) of Gujarat police to seize the assets of the people allegedly behind cryptocurrency sector’s most elusive and sensational scam, the Times of India reported.

Bitconnect, which folded in January, is considered one of the biggest scams in the cryptocurrency market. The coin claimed to be an open-sourced cryptocurrency and investment programme, but turned out to be nothing less than a Ponzi scheme. These accusations were principally based on the multi-level referral system as well as the promise of incredible returns on customer’s initial investments.

This week, the states of Illinois and Arizona reportedly asked the CID to confiscate the properties of BitConnect’s promoters, who allegedly raised INR41,000 ($5.6 billion) from unsuspecting investors. According to the report, majority of the funds were invested into the firm in 2016 after the Modi government banned currency notes of 500 and 1,000 denomination.

According to the Indian agency, “Those who invested in this virtual currency company after demonetization are suspected of laundering black money.”

The fraud was first reported by businessman Shailesh Bhatt, who claimed he had been kidnapped and robbed of INR9 crore ($1.2 million) worth of BTC by local police. However, official investigation revealed that Bhatt invested INR2 crore ($275,000) in BitConnect, but after the company closed in January 2017, the man kidnapped a BitConnect employee and extorted BTC, LTC and cash worth INR155 crore ($25 million) from the victim, according to CID.

In August, CID agents arrested Divyesh Darji, reportedly the head of BitConnect India, at the Delhi airport in India. CID’s PG Narwade told local media outlets that Darji was living in Dubai, and police were alerted “when he was on the way from Dubai to Ahmedabad, after which he was arrested.”

Meanwhile, disgruntled investors are coming after BitConnect. The company has been hit with a class-action lawsuit brought forth by six investors whose losses were of $770,000. A second class-action lawsuit followed, resulting in a U.S. freezing all of BitConnect’s assets.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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