New Delhi: The Enforcement Directorate (ED) seized cryptocurrencies worth ₹1,646 crore in Ahmedabad on Saturday as part of its investigation into the BitConnect cryptocurrency scam, which affected investors worldwide, including in India. Along with the digital assets, the ED also confiscated ₹13.50 lakh in cash, an SUV, and several digital devices following raids at multiple locations across Gujarat.
The ED’s probe, conducted under the Prevention of Money-Laundering Act, 2002, stemmed from FIRs filed in 2018 by Surat’s CID (Crime) police station. In August 2022, Satish Kumbhani, the founder and owner of BitConnect, was named a key suspect in the multi-crore scam.
A specialized team of tech experts was deployed to investigate the complex web of transactions across numerous crypto wallets. Many of these transactions were linked to the “dark web,” making it difficult to trace the funds. The investigation revealed that between November 2016 and January 2018, Kumbhani and his associates ran a fraudulent, unregistered investment program under BitConnect’s US-based Lending Program. They attracted investors with promises of high returns through a supposedly automated “volatility software trading bot.”
Kumbhani and his team offered returns of up to 40% per month by depositing Bitcoin (BTC), which was then converted into BitConnect’s own cryptocurrency (BCC). The platform also featured a referral system, functioning similarly to a multi-level marketing (MLM) scam, where users could earn commissions for bringing in new investors. Fake returns, claiming annualized profits of 3,700%, were displayed on the BitConnect website.
However, investigations showed that no actual trading occurred. Instead, the funds from investors were diverted into wallets controlled by Kumbhani and his associates. They used money from new investors to pay returns to older ones, operating a classic Ponzi scheme. The platform collapsed in January 2018 after financial regulators issued cease-and-desist orders, leaving investors with substantial losses.
Previously, the ED had attached ₹489 crore worth of movable and immovable assets linked to the scam. Authorities also revealed that foreign nationals had invested in BitConnect, and the main accused is currently under investigation by US federal authorities.