The Enforcement Directorate (ED) in Ahmedabad has arrested a man named Shailesh Babulal Bhatt for allegedly kidnapping two employees of the shuttered BitConnect on August 13 and forcing them to hand over cryptocurrencies and cash.
Bhatt, who was arrested under India’s Prevention of Money Laundering Act (PMLA), decided to kidnap two employees after losing money by investing in BitConnect Coin. Bhatt and his partner were found to have demanded a ransom (2,091 Bitcoins, 11,000 Litecoins, and $145 million Indian Rupees) to release the captives.
According to a press release from the law enforcement agency, Bhatt allegedly gave his accomplices up to 2.9 billion Indian rupees, or about $34 million, which was used to purchase real estate, gold and other assets. The report stated:
The ED probe into Shailesh Bhatt revealed that he distributed proceeds of crime (PoC) worth Rs 28.9 crore to his accomplices who were actively involved in kidnapping and extortion, and used it to purchase immovable properties, gold and other assets.
The Enforcement Directorate has already seized assets worth Rs 4.42 crore in connection with the case. Moreover, Bhatt has been produced before the Honorable Special Court, Ahmedabad (PMLA) and is currently in custody while the Enforcement Directorate continues its investigation. They stated:
After conducting investigations so far, ED has already seized movable and immovable properties worth Rs 44.2 crore. Further investigations are underway.
According to the ED report, the Shailesh Bhatt case was registered on the basis of two First Information Reports (FIRs) filed by the National Crime Information Department (CID) in Surat, which stated that he was linked to the BitConnect scam that allegedly stole investors’ money between 2017 and 2018.
The 2016 BitConnect Collapse
BitConnect was launched in 2016. However, its business model was classified as a Ponzi scheme. The company ceased operations in 2018 after allegedly defrauding 4,000 investors and losing $2.4 billion. Satish Kumbhani stopped selling coins in January 2018 and ran off with investors’ money.
The sudden collapse of the company and the loss of investors’ funds led to the US Department of Justice indicting Satish Kumbhani in 2022, accusing him of running a Ponzi scheme through the BitConnect Lending Program. The US Securities and Exchange Commission (SEC) has filed a complaint against him, and he is also under police investigation in India.
Several key figures involved in the BitConnect incident have also faced legal consequences. In September 2021, prominent US promoter Glen Arcaro pleaded guilty to conspiracy to commit wire fraud and was sentenced to 38 months in prison. In Sydney, another promoter, John Bigatton, was found guilty in July of providing unlicensed financial advice.
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