Bitconnect Exchange Kingpin Who ‘Lured Investors’ Arrested in India

Murkier details of the Bitconnect cryptocurrency scam have emerged as police have arrested the head of the defunct cryptocurrency exchange.

[Note: This is a guest article submitted by Bhushan Akolkar]

Bitconnect — A Pyramid Scheme of Scams

Last Saturday, August 18, Indian authorities arrested Divyesh Darji, the Asian head of defunct cryptocurrency exchange, in a high-profile scam worth 880 billion Indian Rupees ($12.6 billion). Local news publication Times of India reported that Divyesh Darji was arrested by the Gujarat CID upon his arrival at Delhi Airport from Dubai. The accused has been moved to the Gujarat capital Gandhinagar for further investigation. 

Darji was one of the promoters of Bitconnect along with Dhaval Mavani, Satish Kumbhani, and Suresh Gorasiya, who have been accused of siphoning investor’s money from the cryptocurrency exchange.

The Bitconnect scam reported earlier this year involves a notorious case of extortion in addition to deceit and fraud.

The Bitconnect scam reported earlier this year involves a notorious case of extortion in addition to deceit and fraud. The launch of Bitconnect simultaneously with the Indian demonetization of November 2016, also raised a lot of questions.

In November 2016, the Indian government demonetized 500 and 1000 INR currency notes in an attempt to choke the circulation of black money in the market. During this period, Bitconnect shot to fame among Indian investors as most of the money was siphoned off into digital assets.

Investigative officer and DGP of CID Crime, Ashish Bhatia said:

The company was registered in the UK and had an office in Surat. They launched their own ‘bitconnect coins’ soon after demonetization. They promoted the company on social media and by holding gala functions in cities across the world. They lured investors with 60% monthly interest, and incentives in the form of referral interest.

This case came to limelight when a Surat-based businessman, Shailesh Bhatt filed a case of deceit, fraud, and extortion against 11 people including Bitconnect promoters. A further police investigation into this matter unearthed multiple cases of crypto scams carried out through the exchange.

Bhatt had previously invested Rs.1.80 crore in digital assets through Bitconnect, which shut down its operations this year in January. The police investigation revealed that Bhatt had allegedly kidnapped Bitconnect promoters Piyush Savaliya and Dhaval Mavani and extorted 2,019 bitcoins, 11,000 litecoins, and Rs 14.50 crore cash. One CID crime official revealed that they recovered 169 bitcoin with over 8 kilograms of gold from Bhatt.

Just when it seemed the case couldn’t get murkier, it was found that Mr. Bhatt was later kidnapped by Surat LCB inspector Anant Patel and eight other policemen, along with the involvement of ex-MLA of Gujarat’s ruling party, Bharatiya Janta Party (BJP).

As the CID crime officials and investigative agencies try to solve the complexities of the case, these interconnections of multiple small scams could possibly lead to a single larger scam. Bitconnect’s promoters, owners, and administrators have been registered under the IPC section for cheating, fraud, and deceit.

What type of consequences should Bitconnect promoters face? Share your thoughts below!

Images courtesy of Shutterstock

Why Bitcoin Would Probably Not Get Listed on Binance Today

If launched today, Bitcoin would likely not be listed on Binance, the world’s biggest cryptocurrency exchange by volume — according to its listing guidelines. 

Getting Your Foot in Binance’s Door

Getting listed on the world’s biggest exchange is the holy grail for any coin that wants to be taken seriously.

At the same time, Binance has been at the receiving end of criticism for charging exorbitant listing fees for new tokens. Bitcoinist reported how Expanse founder Christopher Franko claimed Binance asked for 400 BTC ($2,600,000) to list his altcoin token.

Meanwhile, Binance CEO Changpeng Zhao clarified that his exchange does not list ‘shitcoins.’


In fact, getting listed on Binance is an arduous and expensive process, though the fee is “really not the key factor,” according to Zhao. “There is a 98% chance you won’t hear from us after you submit your application. This is the norm.” He stressed that “we like coins with a proven team, useful product, and large user base.”

In addition, Binance’s guidelines, updated August 12, reiterate that submitting the form is the only way to get your token listed. “We typically require the project founder or CEO to fill out the form,” writes Zhao. “Why? If there ever is a bug with your wallet, a fork or double-spend in your blockchain, we need to talk to a key person.”

Indeed, hacks, cyber attacks, bugs and general errors continue to plague novel low market cap coins. Verge, for example, has experienced several technical issues this year. Such emergencies put users’ funds at risk and thus, close communication between a supporting exchange and the coin’s development team is crucial.

Ultimately, Binance says that at the heart of their listing process is the aim of protecting users and investors.

If Bitcoin Were to Launch Today

Granted, any type of anomaly goes out the window if some authority must fill out the listing form “completely and comprehensively.”

Hence, it is ironic that the most successful cryptocurrency, Bitcoin 00, would likely not get listed for the very reason that made it the most successful: a creator who disappeared.

Also, good luck getting Zhao to read your whitepaper. “Don’t send me your white paper. I don’t do initial reviews” he writes.

Therefore, if Satoshi were to launch Bitcoin today just like it was a decade ago — its chances of landing on Binance would be slim for one simple reason: who would fill out the application? And who would Binance communicate with in case of any issues? Satoshi? One of the Core developers?

“If you have a decentralized cryptocurrency with a founder that disappeared you can never get listed on exchanges,” wrote Twitter personality WhalePanda. “This isn’t just for Binance, this is pretty much for any exchange now.”

At the same time, there are other factors that would probably put it into one of the better categories: Very good, good, average, and bad.

If Bitcoin indeed has the same “strong team” of talented developers, a working product, a large user-base, and no ICO launch but organic growth via mining and proof-of-work, it would likely incur a smaller fee than your “average” token.

Bitcoin’s Immaculate Launch Unreplicable

On the flipside, new cryptocurrencies aspiring to become the ‘next Bitcoin’ will not be able to replicate Bitcoin’s immaculate launch. Creators of new tokens will find it irresistible to get listed. Investors will demand it. Meanwhile, creator(s) will be forced to reveal their identity particularly as calls for regulatory scrutiny grow louder.

In other words, while getting listed on Binance is hard, replicating Bitcoin’s organic launch — at a time when crypto exchanges didn’t even exist — is next to impossible.

“Bitcoin changed the game,” Bitcoin & Markets podcast host Ansel Lindner commented on Twitter.

Trying to compete with bitcoin is like trying to compete with the dollar playing by their rules. Very difficult.

In the meantime, ICOs can expect to pay a nice chunk of their coins as an insurance listing fee — a measure to dissuade scams — though the exact amount is decided by the project itself. 

“For Binance, we hold more of a black box, subjective model. Our listing process is by no means perfect, or anywhere close to it. We are still constantly improving and evolving it,” Zhao adds.

Would Binance list Bitcoin if it launched today? Share your thoughts below! 

Images courtesy of Shutterstock, Twitter