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Digital assets connected to the Bitconnect cryptocurrency scam of Rs. 1,646 crore, or roughly $190 million, have been seized by India’s Directorate of Enforcement (ED) in Ahmedabad. The seizure occurred during raids under the Prevention of Money Laundering Act (PMLA), 2002, which were carried out on February 11 and February 15.
Authorities found cryptocurrency categorized as proceeds of crime throughout the operations. They also confiscated several digital devices, a Lexus automobile, and Rs. 13.5 lakh in cash. The Crime Investigation Department (CID) in Surat filed First Information Reports (FIRs), which served as the basis for the investigation.
Between November 2016 and January 2018, Bitconnect promoted its so-called “Lending Program,” an unregistered securities offering that promised massive returns. The scheme attracted investors worldwide, including in India, by falsely advertising high-yield profits. Bitconnect’s founder built a global network of promoters who earned commissions for recruiting new investors.
The company claimed its “volatility software trading bot” could generate monthly returns of up to 40%. Investors were led to believe they would receive daily returns of 1%, amounting to nearly 3,700% per year. However, investigators revealed that instead of investing the funds, the accused diverted them to digital wallets under their control.
By tracking multiple cryptocurrency wallets and gathering intelligence, ED identified key locations where the digital assets were stored. This allowed authorities to seize the illicit funds and build their case against those involved.
Early in 2018, Bitconnect fell apart after being shown to be a Ponzi scheme. Authorities in the United States have also acted, accusing the company’s founder and leading promoters of conspiring to commit money laundering and wire fraud.
Bitconnect’s top U.S. promoter, Glenn Arcaro, was sentenced to 38 months in prison and mandated to reimburse victims more than $17 million. Satish Kumbhani, the founder of Bitconnect, was charged in February 2022, although it is unclear where he is now. Authorities are still working to find him and get back the money that was stolen in the $2.4 billion scam.