BitConnect's $190M in crypto seized as India cracks down

Indian authorities have seized cryptocurrency worth Rs 1,646 crore, or nearly $190 million, linked to the BitConnect Ponzi (CRYPTO:PONZI) scheme, which defrauded investors globally before collapsing in 2018.

The Enforcement Directorate (ED) of Ahmedabad led the operation, which also resulted in the seizure of ₹13,50,500 (around $15,582), an SUV, and electronic devices during raids in Gujarat on February 11 and 15.

The ED's investigation, initiated under the Prevention of Money Laundering Act (PMLA), stems from FIRs registered by the CID Crime Police Station in Surat.

The BitConnect scheme allegedly duped numerous depositors through securities investment fraud.

According to the ED, the scheme operated between November 2016 and January 2018, collecting funds from investors worldwide, including in India.

BitConnect founder Satish Kumbhani, who was charged by the U.S. Department of Justice in February 2022, established a global network of promoters and paid them commissions. 

The ED found that BitConnect lured investors by promising returns as high as 40% per month through a purported "volatility software trading bot."

However, investor funds were never traded; instead, they were diverted to digital wallets controlled by Kumbhani and his associates.

The ED deployed tech experts to examine the complex web of transactions across numerous crypto wallets, many conducted via the dark web to obscure their origin.

The agency's investigation revealed that BitConnect defrauded over 4,000 investors across 95 countries, amassing $2.4 billion before its collapse.

In one instance, a victim of the Ponzi scheme allegedly kidnapped two of Kumbhani’s employees and extorted 2,091 Bitcoin, 11,000 Litecoin, and approximately $1.7 million for their release, seeking to "recover his investment."