The main accused in the multi-billion dollar Bitconnect case — Divyesh Darji, the Asia head of the UK-based crypto company — has now been arrested at Delhi airport.
He has been accused of siphoning off millions or potentially even billions after luring people to invest their crypto in his company, Bitconnect, which had its headquarters in Surat, India.
Darji’s Linkedin profile shows him as a teacher with 25 years of experience but the profile doesn’t give any details about his association with Bitconnect. It goes on to say that he has done his post graduation in commerce and also holds an LLB, runs a Surat-based cryptocurrency training institute and a fitness solution company, Navivan.
The Gujarat Fraud
Shaktisingh Gohil, a spokesperson for the Indian Congress party had claimed on July 6, “A Bitcoin scam of more than $726 Mn (INR 5,000 Cr) has surfaced in Gujarat with some reports pegging the figure at $12.7 Bn (INR 88,000 Cr).”
Bitconnect was marketed as a multi-level marketing venture wherein revenue was generated by a trading bot over time and the generated funds would be deposited without the option of withdrawal and then returned with interest. Investors were also rewarded for bringing in new recruits to invest their money.
Darji was one of the promoters of the virtual currency investment company, along with Satish Kumbhani, Dhavl Mavani and Suresh Gorasiya. CID crime DGP, Ashish Bhatia, said that based on a look-out notice, Darji was intercepted by immigration authorities at Delhi airport after disembarking from a flight from Dubai. “He was brought to Gandhinagar on Saturday,” added Bhatia.
Typical Ponzi Scheme
Bitconnect took advantage of Indian PM Narendra Modi’s demonetisation ‘masterstroke’ which caused the rerouting of a mix of white, black, and grey money into cryptocurrencies, mostly Bitcoin. Many influencers and members of the cryptocurrency community openly suspected the scheme of being a scam from the outset due to the high return, low risk factor promised in the company’s promotional materials. These naysayers include such prominent figures as Ethereum founder Vitalik Buterin and Litecoin founder Charlie Lee. Both community mouthpieces spoke out against the platform back in November coming to a consensus that it operates like a textbook ponzi scheme.
According to DGP Ashish Bhatia, CID-Crime, Bitconnect was launched in India in November-December of 2016, just after demonetisation was announced. “They launched their own ‘Bitconnect coins’ soon after demonetisation currently trading on the cryptocurrency platform, Satoshi. The company was promoted 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’,” added Bhatia.
Bitconnect’s BCC crypto exchange and investing platform was shut down in January of 2018 after being served a cease and desist letter from Texas regulators. The team immediately declared an ICO as a last ditch effort to squeeze more money out of users before exit scamming with the millions already invested.
Unexpected twists to the case
“This is the same company in which Shailesh Bhatt invested $260K (₹1.80 crore). To recover the money, he had allegedly kidnapped Dhaval Mavani and Piyush Savaliya of Bitconnect. He had extorted 2,019 bitcoins, 11,000 litecoins and $2mn ($14.50 crore) cash. A case was then registered with the Surat zone CID crime. We recovered 169 bitcoins and 8kg of gold from the accused,” added a CID crime official. Later, Surat LCB inspector Anant Patel and eight other policemen allegedly kidnapped Bhatt. “Amreli SP Jagdish Patel was arrested in the case for plotting the kidnapping. Ex-BJP MLA Nalin Kotadiya is also an absconding accused in the case,” a senior CID crime official said.
CID crime officials said they have registered a case against the owners, promoters, and administrators of Bitconnect under the IPC section for cheating and sections of the Gujarat Protection of Investors Deposit Act and The Prize Chit Money Circulation Scheme Banning Act, based on a complaint by Ashwin Limbasiya of Surat.
Satoshi too has now announced that BCC will be delisted on September 10 this year, along with other crypto. In addition to the disclosures, Bitconnect International PLC, Bitconnect Ltd, Bitconnect Trading Ltd, and Ryan Maasen were slapped with an order prohibiting the transfer of any assets they may possess until they are granted permission by the court, according to reports.
Cryptoticker advises our readers to invest in any ICO’s with caution. Do not invest more than you can afford to lose.
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