Indian authorities have arrested Shailesh Babulal Bhatt in connection with the defunct cryptocurrency platform BitConnect, which allegedly raised $2.4 billion from investors.
Arrest of Shailesh Babulal Bhatt
Bhatt, reportedly seeking to recover his lost investments, has been apprehended by the Indian Enforcement Directorate (ED) under the Prevention of Money-Laundering Act (PMLA). According to the ED, Bhatt, along with accomplices, kidnapped two employees of Satish Kumbhani, the founder of BitConnect. The ransom demanded included both cryptocurrency and cash. Bhatt is accused of extorting 2,091 Bitcoins (valued at approximately $125 million), 11,000 Litecoins, and ₹14.50 crore in cash, totaling around ₹1,232.50 crore ($146 million).
Background of BitConnect Scam
BitConnect, launched in 2016, posed as a high-yield investment program offering returns of up to 1% daily through its native token, BitConnect Coin. The scheme promised substantial profits, claiming to use sophisticated "trading bots" and "volatility software" to generate returns. However, BitConnect was a classic Ponzi scheme, using funds from new investors to pay returns to earlier participants. By January 2018, the platform collapsed following cease-and-desist orders from U.S. state regulators, leaving investors worldwide with significant losses.
Legal Actions and Current Status
The BitConnect scam has seen several notable legal actions against its promoters. Glenn Arcaro, a U.S.-based promoter, pleaded guilty to wire fraud conspiracy in September 2021 and was sentenced to 38 months in prison in September 2022. Similarly, John Bigatton, another prominent promoter, was convicted in a Sydney district court for providing unlicensed financial advice in July 2024.
The arrest of Shailesh Babulal Bhatt highlights the ongoing efforts of law enforcement to tackle financial crimes and scams in the cryptocurrency sector. The BitConnect case stands as a significant reminder of the risks associated with high-yield investment schemes.
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