ED Seizes Assets Worth INR 1,646 Cr As Part Of Global Crypto Scandal

SUMMARY

ED has seized assets worth INR 1,646 Cr ($189.5 Mn) in a single search operation, which was part of an investigation led by the US authorities on global $2.4 Bn "ponzi" cryptocurrency scandal

The ED traced the mastermind behind the scandal Satish Kumbhani, founder of Bitconnect to Ahmedabad

Kumbhani went into hiding after his indictment in the fraud by a US district court, where he was accused of running a global ponzi scheme

The Enforcement Directorate (ED) has reportedly seized assets worth INR 1,646 Cr ($189.5 Mn) in one of the biggest catches in a single search operation by an Indian agency.

The operation was part of an investigation led by the US authorities into a global $2.4 Bn “ponzi” cryptocurrency scandal, which allegedly duped hundreds of investors in more than 40 countries, ET reported.

The ED traced Satish Kumbhani, the mastermind behind the scandal and founder of Bitconnect, to Ahmedabad, the report added, citing sources.

Kumbhani went into hiding after his indictment in the fraud by a US district court, where he was accused of running a global ponzi scheme in the name of Bitconnect lending scheme.

The report said that Kumbhani will shortly be interrogated by the ED and is likely to be taken into custody. A ‘look out circular’ has been issued against him.

Post the crypto assets seizure on Wednesday (February 12), the ED is working on restitution of proceeds of crime to the victims of the scandal, including foreign nationals.

The Crypto Scam

The case dates back to 2022, when a grand jury in San Diego in the US indicted the BitConnect founder for ‘orchestrating’ a global crypto ponzi scheme. US Securities and Exchange Commission attorney Richard Primoff said, in a court filing, then that Kumbhani relocated from India to an unknown address in a foreign country.

Kumbhani was also charged with conspiracy to commit wire fraud and price manipulation as well as operating an unlicensed money transmitting business and conspiracy to commit international money laundering.

In 2016, Kumbhani claimed to have created a blockchain called BitConnect, and launched a lending programme using native tokens called bitconnect coins (BCC). He reportedly duped people into investing in his fraudulent cryptocurrency platform that promised too good to be true returns.

At the height of its fame, BitConnect reached a peak market capitalisation of $3.4 Bn.

However, BitConnect closed its exchange in January 2018 after receiving cease-and-desist letters from regulators in Texas and North Carolina.

In September 2021, BitConnect’s director and promoter, Glenn Arcaro, pleaded guilty in a federal court for his participation in a massive conspiracy involving the cryptocurrency platform.

The latest development comes at a time when the crypto industry has been hit by some major scandals in recent times. In July last year, crypto exchange WazirX was hit by a security breach and $234 Mn worth of cryptocurrency was stolen.

Meanwhile, in October last year, crypto exchange Binance and Delhi Police joined forces to dismantle a complex scam orchestrated by a fraudulent entity “M/s Goldcoat Solar”, leading to multiple arrests and seizure of over 1 Lakh USDT in cryptocurrency assets.

Updated at 10:21 AM