Indian authorities have taken a significant step forward in their investigation into the infamous BitConnect scam. The Enforcement Directorate (ED) in Ahmedabad has seized cryptocurrency assets worth $189 million, marking a major milestone in the case.
The operation, conducted under the Prevention of Money Laundering Act (PMLA), led to the confiscation of digital assets linked to BitConnect’s operators. In addition to the seized cryptocurrency, authorities recovered over $15,000 in cash, a luxury vehicle, and several electronic devices during the raid.
BitConnect operated between November 2016 and January 2018, defrauding investors out of an estimated $2.4 billion. The scheme’s promoters lured victims with promises of exceptionally high returns, supposedly generated by a “volatility software trading bot.” Investors were encouraged to deposit funds in Bitcoin or cash, believing their investments would yield substantial profits. In reality, the funds were funneled into wallets controlled by the scheme’s organizers.
Authorities have confirmed that BitConnect functioned as a Ponzi scheme, using deposits from new investors to pay returns to earlier participants. The scheme thrived until regulatory agencies uncovered the fraud, leading to its collapse.
Investigators meticulously tracked the movement of funds across various wallets. Many transactions were deliberately obfuscated through the dark web, complicating efforts to trace the money. However, a thorough analysis of wallet activities, IP addresses, and transaction flows ultimately enabled authorities to locate and seize the digital assets.
This latest enforcement action follows the indictment of BitConnect’s founder, Satish Kumbhani, and its chief US promoter, Glenn Arcaro. In 2022, a US court sentenced Arcaro to 38 months in prison and ordered him to repay $17.6 million to victims across 40 countries.
Kumbhani has been charged with multiple offenses, such as conspiracy to commit wire fraud, manipulating commodity prices, and engaging in international money laundering. If found guilty on all charges, he could face up to 70 years in prison. However, he remains a fugitive, continuing to evade authorities.
By Alejandro Silva Ramírez, Crypto Analyst & Columnist