India Seizes $198M in Crypto Tied to Bitconnect Ponzi Scheme—Unmasking One of the Largest Crypto Frauds
India’s Enforcement Directorate (ED) has seized cryptocurrencies worth approximately $198 million in connection with the infamous Bitconnect Ponzi scheme. This major crackdown marks a significant step in the country’s fight against financial crimes involving digital assets.
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Bitconnect Ponzi Scheme: A Global Crypto Scam
The Bitconnect fraud, which spanned multiple countries, lured investors with promises of exceptionally high returns. The scheme operated under the guise of a “Lending Program,” enticing individuals to invest their funds with claims of up to 40% monthly profits. However, investigators later discovered that Bitconnect’s operations were nothing more than a cleverly disguised pyramid scheme.
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India’s Crackdown: Seizing Crypto Linked to Fraud
On February 15, India’s ED announced that its Ahmedabad branch had seized cryptocurrencies worth Rs. 1,646 crore (approximately $198 million) following raids conducted on February 11 and 15. The search operations were carried out under the Prevention of Money Laundering Act (PMLA), 2002. Officials confirmed that along with digital assets, authorities also confiscated Rs. 13.5 lakh in cash, a Lexus luxury car, and multiple digital devices suspected of containing crucial evidence.
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In a statement, the ED explained:
“During the search operations, proceeds of crime in the form of various cryptocurrencies worth Rs. 1,646 crore were recovered and seized. Additionally, cash, a luxury vehicle, and digital devices linked to the scheme were confiscated as part of the investigation.”
The probe was initiated based on First Information Reports (FIRs) filed by the Crime Investigation Department (CID) in Surat, which uncovered extensive fraudulent activities linked to Bitconnect in India.
How Bitconnect Defrauded Investors
Between November 2016 and January 2018, Bitconnect aggressively promoted its so-called “Lending Program,” promising users guaranteed daily returns of 1%, which translated to an astronomical 3,700% annually. The platform falsely claimed that a proprietary “volatility software trading bot” generated these profits by executing highly profitable crypto trades.
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However, authorities found that no such trading bot existed. Instead, investor funds were funneled into the personal digital wallets of Bitconnect’s top promoters. The ED emphasized that by tracking online crypto wallets and utilizing intelligence-gathering techniques, they were able to pinpoint the digital assets tied to the scheme.
Bitconnect’s Global Fallout and Legal Consequences
Bitconnect collapsed in early 2018 after being exposed as a fraudulent operation, leading to global legal action. In the U.S., multiple lawsuits and criminal charges were filed against key figures behind the scheme.
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- Glenn Arcaro, Bitconnect’s top U.S. promoter, was sentenced to 38 months in prison and ordered to repay over $17 million in restitution to defrauded investors.
- Satish Kumbhani, the founder of Bitconnect, was indicted in February 2022 on charges of conspiracy to commit wire fraud and money laundering. However, his whereabouts remain unknown, and authorities are actively seeking his arrest.
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India’s Push for Crypto Regulation Amid Rising Scams
The seizure of $198 million worth of crypto assets in India underscores the government’s growing concerns over illicit activities in the digital asset space. Authorities have ramped up efforts to implement stronger oversight and introduce legal frameworks to regulate cryptocurrency transactions.
With cryptocurrency fraud cases rising worldwide, India’s crackdown on Bitconnect highlights the urgent need for investor education, regulatory clarity, and enhanced security measures in the crypto sector. As investigations continue, authorities remain focused on recovering stolen funds and holding perpetrators accountable.
