Indian authorities have arrested a man accused of kidnapping two individuals connected to the infamous BitConnect cryptocurrency scheme in a bid to recover his lost investments. The suspect, Shailesh Babulal Bhatt, reportedly extorted $125 million in cryptocurrency as part of his plan to recoup his losses.
Details of the Kidnapping and Extortion
According to an August 17 statement by the Indian Enforcement Directorate (ED) in Ahmedabad, Bhatt lost a significant amount of money after investing in BitConnect Coin, a cryptocurrency tied to the now-defunct BitConnect platform. BitConnect, which launched in 2016 and collapsed in 2018, has been widely recognized as a global Ponzi scheme that defrauded thousands of investors worldwide.
Desperate to recover his funds, Bhatt allegedly orchestrated the kidnapping of two employees associated with BitConnect’s creator, Satish Kumbhani. The ED claims that Bhatt, along with several accomplices, held the employees hostage and demanded 2,091 Bitcoin (BTC) and approximately $1.7 million (145 million Indian rupees) as ransom for their release.
Also Read: BitConnect Victims to Receive Millions of US Dollars as Repayment
Financial Trail and Arrest
During the investigation, Bhatt reportedly admitted to paying his accomplices $34 million (2.9 billion Indian rupees) for their involvement in the kidnapping and extortion plot. These funds were allegedly used to purchase various assets, including immovable properties and gold.
Bhatt was arrested on August 13 under India’s Prevention of Money-Laundering Act (PMLA) and has since been in ED custody after appearing before a Special Court in Ahmedabad. The law enforcement agency has already recovered movable and immovable properties worth $52 million (4.4 billion Indian rupees) as part of their ongoing investigation.
The Broader BitConnect Scandal
BitConnect’s rise and fall is one of the most notorious stories in the cryptocurrency world. The platform promised high returns through a lending program that ultimately turned out to be a Ponzi scheme. At its peak, BitConnect drew in around 4,000 investors from 95 countries, leading to losses estimated at $2.4 billion when the platform collapsed.
Satish Kumbhani, the founder of BitConnect, has been charged by the U.S. Department of Justice (DOJ) for his role in the scheme, but his whereabouts remain unknown as of 2024. Kumbhani is also under investigation by Indian authorities and was sued by the U.S. Securities and Exchange Commission (SEC) following the platform’s collapse.
Legal Repercussions for Others Involved
The fallout from the BitConnect scandal has led to legal action against several key figures associated with the platform. Glenn Arcaro, a prominent U.S.-based promoter of BitConnect, pleaded guilty to wire fraud conspiracy charges in September 2021 and was sentenced to 38 months in prison. In July 2024, John Bigatton, another key promoter, was convicted in a Sydney district court for providing unlicensed financial advice related to BitConnect.
