TLDR
- Indian authorities arrested Shailesh Babulal Bhatt for allegedly kidnapping two BitConnect employees
- Bhatt allegedly extorted 2,091 Bitcoin, 11,000 Litecoin, and $1.7 million in cash
- The total value of the extorted assets is estimated at $125-148 million
- Bhatt was reportedly trying to recover losses from investing in BitConnect, a failed crypto platform
- BitConnect collapsed in 2018, with investors losing an estimated $2.4 billion
Indian law enforcement has arrested a man in connection with a cryptocurrency extortion case linked to the collapsed platform BitConnect. Shailesh Babulal Bhatt, a resident of Gujarat, was taken into custody on August 13, 2024, by the Enforcement Directorate (ED) of Ahmedabad under India’s Prevention of Money-Laundering Act.
According to the ED, Bhatt allegedly kidnapped two employees of Satish Kumbhani, the creator of BitConnect, in an attempt to recover losses from his investment in BitConnect Coin (BCC).
The authorities claim that Bhatt, along with accomplices, extorted 2,091 Bitcoin, 11,000 Litecoin, and approximately $1.7 million (145 million Indian rupees) in cash for the release of the kidnapped individuals.
The total value of the extorted assets is estimated to be between $125 million and $148 million, based on current cryptocurrency prices. This incident highlights the ongoing fallout from the collapse of BitConnect, a cryptocurrency platform that shut down in 2018 amid accusations of being a Ponzi scheme.
BitConnect, which launched in 2016, promised high returns to investors. However, it collapsed in 2018, resulting in estimated losses of $2.4 billion for about 4,000 people from 95 countries.
The platform’s founder, Satish Kumbhani, was charged by the United States Department of Justice in February 2022 for allegedly running a Ponzi scheme through BitConnect’s lending program. As of 2024, Kumbhani’s whereabouts remain unknown.
During the investigation, Bhatt reportedly revealed that he paid his accomplices 2.9 billion Indian rupees ($34 million) for their participation in the kidnapping and extortion. The ED states that this money was used to purchase “immovable properties, gold and other assets.”
The law enforcement agency has already recovered “movable and immovable properties” worth 4.4 billion Indian rupees ($52 million) in connection with the case. The investigation, which is still ongoing, was initiated based on two first information reports about BitConnect from the State Crime Investigation Department in Surat.
This case is part of a larger effort by Indian authorities to tackle money laundering and fraud in the cryptocurrency sector. It also serves as a stark reminder of the risks associated with investing in unregulated or suspicious cryptocurrency platforms.
The BitConnect scandal has led to legal actions against several individuals involved with the platform. In the United States, Glenn Arcaro, a prominent promoter of BitConnect, pleaded guilty to wire fraud conspiracy charges in September 2021. He was sentenced to 38 months in prison on September 16, 2022.
In Australia, John Bigatton, another prominent promoter of the defunct crypto exchange, was convicted in a Sydney district court in July for providing unlicensed financial advice related to BitConnect.
The arrest of Shailesh Babulal Bhatt adds another chapter to the ongoing BitConnect saga. It underscores the potential for desperate actions by investors who have suffered significant losses in cryptocurrency schemes. The case also highlights the challenges faced by law enforcement agencies in dealing with crypto-related crimes, especially those involving cross-border transactions and fugitive suspects.
As the investigation continues, authorities are working to uncover more details about how the extorted funds were used and where they might be hidden.
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