In what turns out to be a shocking turn of events, really proving how deep cryptocurrency frauds run, an Indian investor from Gujarat, Shailesh Babulal Bhatt, has been arrested for kidnapping two employees associated with the founder of the infamous cryptocurrency BitConnect, Satish Kumbhani.
This develops into a shocking tale of the disastrous fall of the BitConnect Ponzi scheme in 2018 that left thousands of investors in financial ruin.
The Collapse Of BitConnect
At one time, BitConnect, and its token Bitconnect Coin, were truly a darling of the crypto world, promising investors astronomical returns both through a lending program and with the help of a trading bot. But it was unmasked as something very serious: a Ponzi that fleeced investors of about $2.4 billion before regulatory forces pressured it to shut down in the United States.
The fallout from that collapse ripples through the crypto community to this day, and in many ways, Gupta’s case is an amplified example of how some of the victims have gone to great depths in trying to get their restitution.
A Desperate Move
According to reports, Bhatt and his co-accused allegedly kidnapped the two employees in a desperate bid to recoup losses from the BitConnect scam. To recover what it had lost, through extortion, 2,091 Bitcoins, 11,000 Litecoins, and close to $1.7 million in cash were forcibly taken from the victims. At current market rates, this haul amounts to an eye-watering $146.8 million.
However, as all good times in the life of Bhatt went, it did not last long. The Enforcement Directorate, the economic intelligence agency of India, acted swiftly and attached assets connected with the case worth about $52 million. Attached are properties and other valuables that were alleged to have been bought with the extorted money, which shows authorities mean business in the recovery of such ill-gotten wealth.
Bhatt’s arrest on August 13 represents a key development in uncovering the case’s history. The investigation into his activities began after two First Information Reports were filed in 2022, which revealed the extent of the BitConnect scam and its subsequent fallout.
While the reports also probe deeper into the repercussions of this event, they also search for the whereabouts of the suspect involved—one Kumbhani, currently at large and being searched for by all the involved police forces.
Featured image from Tokio Marine Insurance, chart from TradingView