Indian authorities have made a significant breakthrough in the ongoing investigation into the BitConnect scam. The Enforcement Directorate in Ahmedabad has seized cryptocurrency assets worth $189 million, a move that marks a major development in the case.
Under the Prevention of Money Laundering Act, the operation led to the confiscation of digital assets associated with BitConnect's operators. Along with the cryptocurrency assets, officials also seized over $15,000 in cash, a luxury vehicle, and various electronic devices during the raid.
BitConnect, a fraudulent scheme that operated from November 2016 to January 2018, duped investors out of an estimated $2.4 billion. The scheme's promoters enticed victims with promises of high returns using a supposed "volatility software trading bot."
Investors were urged to invest funds in Bitcoin or cash, believing they would see substantial profits. However, the money was funneled into wallets controlled by the scheme's organizers instead.
Authorities revealed that BitConnect functioned as a Ponzi scheme, utilizing funds from new investors to pay earlier participants. The scheme thrived until its fraudulent nature was exposed, resulting in its collapse.
Investigators meticulously tracked the movement of funds through various wallets, even as many transactions were obscured on the dark web. Through detailed analysis of wallet activities, IP addresses, and transaction patterns, authorities successfully located the digital assets.
This recent seizure comes after the legal actions taken against BitConnect founder Satish Kumbhani and its chief US promoter, Glenn Arcaro. Arcaro was sentenced to 38 months in prison and ordered to repay $17.6 million to victims in multiple countries.
Kumbhani is facing several charges, including conspiracy to commit wire fraud, commodity price manipulation, and international money laundering. If found guilty on all charges, he could potentially receive a maximum prison sentence of 70 years. However, he is currently evading prosecution as a fugitive.