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

Crypto Scam: Head of BitConnect India Arrested at Delhi Airport

Divyesh Darji, the head of BitConnect India and the alleged kingpin of a cryptocurrency scam that duped investors out of billions of dollars, was arrested on Saturday by the Gujarat Criminal Investigation Department (CID) at the Delhi airport.

Inspector P G Narwade of CID crime of the Gujarat police said Darji was living in Dubai prior to the arrest. A look-out circular was issued against him. He was apprehended while on his way from the UAE city to Ahmedabad, India after the immigration department alerted the police.

Darji was one of the promoters of the BitConnect Ponzi scheme, along with Satish Kumbhani, Dhavl Mavani, Mahendra Chaudhari, and Suresh Gorasiya. The team allegedly siphoned off about US$12 billion from naive investors. Many high-profile names, including politicians, are also accused in the scam. Most of the promoters of this scheme fled abroad after the Gujarat police’s CID crime started the investigation.

“The company came into existence in 2016, and in 2017, it launched the BitConnect tokens. It remained active till January this year. It released 28 million BitConnect tokens, out of which 18 million tokens were sold to investors,” Narwade said, as quoted by the Financial Express. “The accused held seminars, events in India and other countries promising high interest on investment in BitConnect tokens.”

Ashish Bhatia, the director general of police (DGP) of CID crime of the Gujarat police, said the company was registered in the UK and had an office in Surat. It lured investors with 60% monthly interest and incentives in the form of “referrals interest.”

BitConnect scheme

BitConnect scheme

The scam came to light in India after deceived BitConnect investor Shailesh Bahtt allegedly extorted cryptocurrencies and cash worth over Rs 155 crore (US$22 million) at gunpoint from Dhaval Mavani and Piyush Savaliya of BitConnect. Later, Bhatt and his business partner were allegedly kidnapped by policemen and extorted cryptocurrencies worth Rs 9 crore (US$1.2 million).

BitConnect, touted itself as a “self-regulating financial system,” used buzzwords and celebrities to lure investors to participate. These would “lend” funds in bitcoin to finance various projects. The funds would then be converted to BitConnect tokens.

BitConnect tokens were worth more than US$435 each in January, before plummeting to less than US$5 a month a later.

Trade Satoshi is the last cryptocurrency exchange platform that still trades BitConnect tokens. It plans to delist it in September.

BitConnect shut down on January 16th 2018.

The arrest of Darji comes just a few months after self-proclaimed “cryptocurrency guru and visionary,” Amit Bhardwaj was arrested for scamming investors out of Rs 2,000 crore (US$307 million).

Bhardwaj, who was on the run for almost a year, was arrested at the Bangkok airport on April 4th and later brought to Pune to face trial.

Police Arrest Alleged India Head of Now-Defunct Bitconnect Scam

Indian police have arrested a man who was allegedly involved in promoting the Bitconnect investment scam, Financial Express reported August 18.

The suspect, Divyesh Darji, is said to have been the India head of Bitconnect, the high-yield investment program that ceased its operations in January 2018 after coming under scrutiny for appearing to be a fraudulent Ponzi scheme.

Darji, a resident of Surat city, had reportedly already been issued with a look-out circular and was arrested August 18 in Delhi airport, after a tip-off from local immigration services. Financial Express cites Inspector P G Narwade of Criminal Investigation Department (CID-Crime) of Gujarat police as saying that:

“[Bitconnect] came into existence in 2016, and in 2017, it launched the BitConnect [BCC] coin. It remained active till January this year. It released 2.8 crore [28 million] coins, out of which 1.8 crore [18 million] coins were sold to investors. The accused held seminars, events in India and other countries promising high interest — daily interest rate of 1 per cent — on investment in BitConnect coins.”

Narwade added that the cost of one BCC coin on January 16, 2018 – the date on which Bitcoinnect formally closed its operations – was $362.

According to Financial Express, a recently filed Freedom of Information Report (FIR) shows that this is the third case under investigation by the Surat unit of CID. Local promoters of Bitconnect are alleged to have fled with 1.14 crore (11.4 million) rupees worth of Bitcoin from one investor.

The CID further claims that staff at the Bitcoinnect office in Surat admitted that promoters had overall amassed “crores [tens of millions] of rupees from thousands of investors.”

The CID was reportedly initially alerted to the scam following allegations from another Surat resident, Shailesh Bhatt, who had claimed to have been kidnapped and robbed of 90 million rupees worth of Bitcoin by local police.

As it subsequently emerged, Bhatt had himself been implicated in the alleged extortion of 1.55 billion rupees’ worth of crypto and cash at gunpoint – including 2,400 bitcoins – from two accomplices of another local Bitconnect promoter, Satish Kumbhani. Bhatt, himself a Bitconnect investor, had reportedly held Kumbhani responsible for the loss of his own funds.

In the midst of the CID’s investigations into this web of incidents, Bitconnect suddenly ceased its operations, meaning that scores of investors were no longer able to redeem or trade their BCC holdings.

As Cointelegraph has previously reported, BCC reached the summit of its popularity in December 2017, when the token’s market capitalization hit about $2.7 billion. Just days later, on Jan. 4, the state of Texas issued a cease and desist order against BitConnect for the selling of unlicensed securities, triggering a crash of the BCC token and the platform’s closure.

Since then, former BitConnect investors have been pursuing a class action lawsuit seeking compensation from the company.

The case has drawn widespread condemnation from the crypto community, including Ethereum’s Vitalik Buterin.