BitConnect Crypto Fraud: ED Seizes Cryptocurrency Worth Rs1,646 Crore, Rs13.50 Lakh Cash, Other Valuables

Moneylife Digital Team 17 February 2025

Economy & Nation

The Ahmedabad zonal office of the directorate of enforcement (ED) has seized cryptocurrency worth around Rs1,646 crore, along with Rs13.50 lakh in cash, a Lexus car and several digital devices, as part of its investigation into the BitConnect cryptocurrency fraud. The seizures were made during search operations conducted on 11th February and 15 February 2025 under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.

ED’s investigation was initiated following first information reports (FIRs) registered by the crime investigation department at Surat police station. It was discovered that between November 2016 and January 2018, the accused orchestrated a fraudulent and unregistered sale of securities through BitConnect’s so-called 'lending program'. This scheme attracted investors from around the world, including India, with promises of extraordinarily high returns.

BitConnect’s founder and a network of promoters enticed investors by claiming that funds would be managed by a proprietary 'volatility software trading bot' capable of generating up to 40% returns per month. The company displayed fictitious returns on its website, suggesting annualised gains of 3,700%.

However, ED's investigations revealed that no such trading bot existed, and investor funds were instead siphoned off for the personal benefit of the accused and their associates, who transferred the money into digital wallets controlled by them.

ED conducted an extensive probe into the web of transactions which were deliberately obfuscated through multiple crypto wallets and dark web transactions to avoid detection. Through meticulous tracking and ground intelligence, investigators were able to identify the key digital wallets and locate the premises where the illicit cryptocurrency was stored. As a result, the digital assets were transferred to the ED’s account, securing them from further manipulation.

In an earlier phase of the investigation, ED had attached movable and immovable assets worth around Rs489 crore.

Further information from online sources indicates that foreign nationals were also affected by the BitConnect scam. The main accused is currently under investigation in the US, adding an international dimension to the case, the agency says.

In April 2024, ED attached movable properties in the form of cryptocurrencies, gold and cash valued at over Rs430 crore in a money laundering case against accused Divyesh Darji and others.

"ED investigation revealed that during the period from November 2016 to January 2018, Satish Kumbhani, the promoter of Bitconnect Coin (a cryptocurrency), established a worldwide network of promoters and induced the public to invest in various investment schemes related to Bitconnect Coin by offering huge returns," said a senior ED official. (Read: ED Attaches Assets Worth Over Rs430 Crore in Money Laundering Case Linked to Bitconnect Coin)

In March 2022, a federal grand jury in San Diego charged Satish Kumbhani, founder of BitConnect, with orchestrating a global Ponzi scheme. He is accused of conspiracy to commit wire fraud, commodity price manipulation, operation of an unlicensed money-transmitting business and conspiracy to commit international money laundering. BitConnect is an alleged fraudulent cryptocurrency investment platform that reached a peak market capitalisation of US$3.4bn (billion).

Citing court documents, a release from the US department of justice (DoJ) says, Satish Kumbhani, from Hemal in Gujarat, misled investors about BitConnect’s ‘Lending Program’. Under this program, Mr Kumbhani and his co-conspirators touted BitConnect’s purported proprietary technology, known as the ‘BitConnect trading bot’ and ‘volatility software’, as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.

However, as alleged in the indictment, BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Mr Kumbhani and his co-conspirators obtained around US$2.4bn from investors, the court documents say. (Read: BitConnect Founder Satish Kumbhani Indicted by US Court in US$ 2.4 Billion Crypto Ponzi Scam)

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