India’s ED detains two linked to BitConnect crypto scam

India’s Enforcement Directorate (ED) has announced the arrest of two suspects in connection with the BitConnect crypto fraud. According to authorities, the BitConnect crypto fraud is a case that involved several illicit acts, including global fraud, kidnapping, and extortion involving thousands of Bitcoin and millions in cash.

According to the statement by the Indian agency, the suspects were arrested by officers attached to its Ahmedabad zonal office under the Prevention of Money Laundering Act. The officials mentioned that the arrested suspects were 33-year-old Nikunj Pravinbhai Bhatt and 49-year-old Sanjay Kotadia. They claimed the suspects were arrested in an extortion case in relation to the BitConnect fraud.

India’s ED apprehends two connected to the BitConnect crypto fraud group

The money laundering investigation opened against the suspects was due to the multiple FIRs registered by the CID Crime branch in Surat against BitConnect founder Satish Jurjibhai Kumbhani and others. According to investigators, Kumbhani and his associates allegedly induced the public to invest in BitConnect Coin, with the organizers stealing the proceeds of the investment scheme to purchase Bitcoin and other luxury properties.

The scheme ran between November 2016 and January 2018, involving the offering of unregistered digital assets through BitConnect’s Lending Program, which targeted investors worldwide, including multiple investors across India. In its statement, the ED mentioned that BitConnect claimed that it was a high-yield investment platform. The platform claimed to use a proprietary volatility trading bot that could generate returns of up to 40% every month for its users.

The agency noted that the claims were lies and used to create a false sense of platform growth, including several fabricated daily returns of around 1% on its website. The funds were later diverted into digital assets controlled by the accused and his associates rather than being used for trading. The second FIR was registered in relation to the kidnapping of two associates of Kumbhani, Piyush Savaliya and Dhaval Mavani, allegedly ordered by Shailesh Bhatt.

Authorities claimed that the kidnapping was to recover an investment in BitConnect Coin that was stolen by the associates. They claimed that he was able to extort 2,254 Bitcoin, 11,000 Litecoin, and Rs. 14.5 crore in cash from Mavani in exchange for his release. The ED mentioned that Nikunj Bhatt was an accomplice in the kidnapping and extortion. The agency claimed he received around 266 Bitcoin for his part in the operation, but has now gained control of 10.9 Bitcoin from his payment stash.

Authorities claimed the suspects were involved in kidnappings

The Indian agency claimed that Bhatt knowingly routed more than 246 Bitcoin using third-party crypto wallets to conceal ownership and origin, converting them into Ethereum and USDT before eventually moving them to multiple wallets, including those linked to Sanjay Kotadia. The ED also found that at least Rs. 20.70 crore was moved by Bhatt to wallets associated with Kotadia for crypto trading purposes, with Kotadia also taking Rs. 4.05 crore for similar purposes.

The ED carried out searches at five locations on January 9, which led to the seizure of several digital devices, incriminating documents, cash, and freezing of assets, including shares and digital assets. The value of frozen assets was estimated to be around Rs. 19 crore. The Indian agency claimed that both men gave incomplete disclosures and lied during questioning, attempting to obstruct the probe despite repeated opportunities to cooperate.

Due to this reason, the Indian agency branded them a flight risk and asked the court to allow them keep both of them in custody. The court granted four days of custody, urging the ED to charge the men as soon as investigations are wrapped up. Forensic analysis by the ED also showed transactions and exchanges showing the link between the two arrested men. The ED says investigations are still ongoing, but they have been able to seize Rs. 2,170 crore from one of the main accused.

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