Indian authorities have arrested Shailesh Babulal Bhatt in connection with the defunct cryptocurrency platform BitConnect, which allegedly raised $2.4 billion from investors.
The 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). Bhatt, who had invested heavily in BitConnect Coin, allegedly took extreme measures to reclaim his lost funds. 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). The investigation revealed that Bhatt used a portion of the extorted funds to reward his accomplices and purchase assets such as properties and gold. Specifically, Bhatt shared ₹289 crore ($1.7 million) of the extorted money with his partners in crime. This funding was reportedly used for luxury purchases and investments. The arrest follows an ongoing investigation initiated by complaints filed by the Surat Police CID against Satish Kumbhani, who disappeared after shutting down BitConnect and is facing legal actions in both the U.S. and India.
Background of the BitConnect Scheme
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 Consequences
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 and the ongoing investigation of the BitConnect case underline the scale and complexity of Ponzi schemes, as well as the importance of stringent compliance and oversight of financial platforms.
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