Indian authorities, the Enforcement Department, have seized cryptocurrency worth Rs. 1,646 crore (approximately $189 million) in connection to a cryptocurrency investment scam.
According to the authorities, the funds, which were in several digital assets, were linked to the Bitconnect crypto fraud. The platform defrauded numerous investors, seducing them with enticing securities investment opportunities. In addition to the funds, the department also seized physical cash, an SUV, and several digital devices found during their searches at different locations between February 11 and 15.
In the statement provided by the Enforcement Department, the agency mentioned that it investigated in line with the provisions of the Prevention of Money Laundering Act (PMLA) in line with the registered FIRs by the CID Crime Police Station in Surat.
According to the Indian authorities, the suspects carried out their activities from November 2016 to January 2018, collecting funds from investors in India and abroad for investment purposes. The police statement revealed that the founder of the BitConnect investment platform, an illegal organization, paid networks of promoters across the world to introduce people to the platform.
In return for recruiting investors, the promoters are given a certain corresponding commission. The investors were induced to deposit funds, which were either in cash or other digital assets, into the lending platform that was represented by BitConnect. The platform told investors that, among other kings, they would use a volatility software trading bot, which they claimed will help the investors generate returns, which can go as high as 40% every month.
Indian authorities also mentioned that the BitConnect investment platform posted fake returns on its platform, telling investors that they could get as high as a 1% yield every day or 3700% annually. The agency mentioned that the accused were well aware of these and still went ahead to recruit people to invest their hard-earned funds on the platform. The Indian authorities claimed that the platform did not have a trading bot, but they siphoned investor funds and moved them to digital wallets in their control.
Investigations unmask trail of digital wallets
According to the Indian authorities, the criminals used the funds for their benefit diverting it into purchases of luxury items while still having some of it. The agency mentioned that its investigation on the wallets used for the operations turned out several wallets. It mentioned the investigation was to try to unmask the origin and destination of the funds.
The agency highlighted that most of the transactions it traced were connected to the dark web, with the criminals tactically trying to make it untraceable. However, as part of its ground intelligence and tracking expertise, it was able to detect the digital wallets that contained the digital assets, seizing them from the criminals. In an earlier investigation related to the case, the authorities were able to seize Rs 489 crore worth of properties from the criminals.
According to some sources, the investors on the platform were nationals from countries across the globe. While the Indian authorities are moving ahead with their investigations, the perpetrators are also being tried in the United States by federal authorities. According to a ruling in the federal district court in San Diego, over $17 million in restitution has been budgeted to be returned to about 800 victims of the scheme in 40 countries globally.
The creator of the platform, Satish Kumbhani was indicted in 2022, with his promoter in the United States Glenn Arcaro indicted for conspiracy to commit wire fraud. This scheme underscores the need to be watchful in the crypto sector. Unlike the traditional finance industry where firms can make efforts to recover stolen funds, it is hard to recover stolen funds in the crypto industry.
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