The Enforcement Directorate has arrested two individuals linked to the massive BitConnect cryptocurrency fraud involving kidnapping and extortion. This case exposes a complex web of deceit affecting investors across India and globally.
The Enforcement Directorate has arrested two people in connection with the sprawling BitConnect cryptocurrency fraud, a case that spans alleged global deception, kidnapping and extortion involving thousands of Bitcoins and crores of rupees in cash.
The agency’s Ahmedabad zonal office arrested Nikunj Pravinbhai Bhatt, 33, and Sanjay Kotadia, 49, under the Prevention of Money Laundering Act in a probe linked to the BitConnectCoin fraud and a related extortion case, officials said.
The money laundering investigation stems from two FIRs registered by the CID Crime branch in Surat against Shailesh Babulal Bhatt, BitConnect founder Satish Kurjibhai Kumbhani and others.
Investigators allege that Kumbhani and his associates induced the public to invest in BitConnect Coin, siphoning off the proceeds to acquire Bitcoins and immovable properties. The scheme, which ran between November 2016 and January 2018, involved an unregistered offering of cryptocurrencies through BitConnect’s so-called Lending Program, which targeted investors worldwide, including in India.
According to the ED, BitConnect projected itself as a high-return investment platform, claiming to deploy a proprietary volatility trading bot that could generate returns of up to 40 percent per month. The agency says these claims were fictitious and used to create a false image of growth, including posting fabricated daily returns of around one percent on its website.
The funds were allegedly diverted to digital wallets controlled by the accused and their associates rather than being deployed for trading.
The second FIR relates to the kidnapping of two associates of Kumbhani, Piyush Savaliya and Dhaval Mavani, allegedly orchestrated by Shailesh Bhatt and his accomplices to recover a purported investment in BitConnect Coin.
Investigators allege that the accused extorted 2,254 Bitcoins, 11,000 Litecoins and Rs 14.5 crore in cash from Mavani in exchange for his release.
The ED says Nikunj Bhatt was an accomplice in the kidnapping and extortion. Of the extorted Bitcoins, he allegedly received at least 266 Bitcoins across two accounts held with a crypto exchange. The agency has attached 10.9 of these Bitcoins.
Investigators allege that Bhatt knowingly routed at least 246 Bitcoins through third-party crypto accounts to conceal ownership and origin, converting them into Ethereum and USDT before transferring them to multiple wallets, including those linked to Sanjay Kotadia.
The probe found that at least 23 lakh USDT, equivalent to about Rs 20.70 crore, was transferred by Bhatt to wallets associated with Kotadia, purportedly for cryptocurrency trading. Separately, Kotadia is alleged to have received at least 4.5 lakh USDT, equivalent to Rs 4.05 crore, from Shailesh Bhatt for similar purposes.
On January 9, searches were conducted at five locations under the PMLA, leading to the seizure of digital devices, incriminating documents and cash, and the freezing of assets including shares, mutual fund investments and cryptocurrencies. The total value of seized and frozen assets is estimated at around Rs 19 crore.
Forensic analysis of electronic records revealed cryptocurrency transaction data and exchange-related documents showing transactional linkages between the two arrested men.
The ED said both Bhatt and Kotadia gave evasive and incomplete disclosures during the investigation and attempted to obstruct the probe despite repeated opportunities to cooperate.
Citing non-cooperation, risk of evidence tampering and flight risk, the agency arrested the duo and produced them before the special PMLA court in Ahmedabad on January 20. The court granted the ED four days of custody.
