The India Directorate of Enforcement (ED) in Ahmedabad, on August 13, arrested a man, Shailesh Babulal Bhatt, for kidnapping two employees of the defunct BitConnect and was also charged with forcing them to hand over both cryptocurrency and cash.
Bhatt, who was arrested under India’s Prevention of Money-Laundering Act (PMLA), decided to kidnap two employees after losing money from investing in BitConnect Coin. It was discovered that Bhatt and his partner demanded a ransom—2,091 Bitcoin, 11,000 Litecoin, and 145 million Indian rupees—for the release of the captives.
Based on the press release by the law enforcement agencies, Bhatt gave his accomplice a share of up to 2.9 billion Indian rupees, around $34 million from the proceeds, reportedly used to purchase real estate, gold, and other assets. The report stated:
ED investigation qua Shailesh Bhatt has revealed that he distributed Rs. 289 Crore in proceeds of crime (PoC) to his accomplices in lieu of their active participation in kidnapping and extortion, which was further used to purchase immovable properties, gold, and other assets.
The Directorate of Enforcement says it has already seized properties worth 4.42 billion Indian rupees related to this case. More so, Bhatt has appeared before the Hon’ble Special Court (PMLA) Ahmedabad, and he is currently in custody of the ED as they continue to investigate. They noted:
So far, after conducting an investigation, the ED has already attached movable & immovable properties to the tune of Rs. 442 Crore. Further investigation is under progress.
The reports by the ED revealed that the Shailesh Bhatt case was opened based on two First Information Reports (FIRs) filed by the State Crime Investigation Department (CID) in Surat, which were connected to the BitConnect scheme that allegedly stole investors’ money between 2017 and 2018.
BitConnect’s Collapse in 2016
BitConnect started in 2016. However, its mode of business was tagged as a Ponzi scheme. The company stopped operations in 2018 after allegedly defrauding 4,000 investors, causing them to lose $2.4 billion. Satish Kumbhani stopped selling the coin in January 2018 and ran off with investors’ money.
Due to the company’s sudden collapse and investors’ loss of money, the US Department of Justice charged Satish Kumbhani in 2022. It accused him of running a Ponzi scheme through his BitConnect Lending Program. The U.S. Securities and Exchange Commission (SEC) sued him, and he is also under police investigation in India.
Some key figures connected to the BitConnect case have also faced legal consequences. In September 2021, Glenn Arcaro, a well-known promoter in the U.S., 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 of giving unlicensed financial advice in July.
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