Synopsis: India’s Enforcement Directorate (ED) has arrested two key accused in the multi-crore BitConnect cryptocurrency scam and frozen assets worth Rs 2,170 crore. The case is linked to a massive global fraud and a kidnapping-extortion plot. Investigations continue as authorities intensify efforts to recover investors money.
The Enforcement Directorate has arrested Nikunj Pravinbhai Bhatt and Sanjay Kanubhai Kotadia in connection with the BitConnect cryptocurrency scam. Bhatt, 33, is a resident of Surat, while Kotadia, 49, is based in Mumbai. The arrests were made on January 19 under the Prevention of Money Laundering Act (PMLA).
A special court in Ahmedabad granted the agency four days of custodial remand for further questioning. Officials said both accused had been uncooperative and provided misleading information, especially regarding cryptocurrency transactions. Investigators also cited the risk of evidence tampering and flight as reasons for immediate action.
Earlier, the ED had arrested Shailesh Babulal Bhatt, a key accused in the case.
Nationwide Investigation
The investigation began after two FIRs were registered by Surat CID against Shailesh Bhatt, BitConnect founder Satish Kumbhani, and other associates.
The accused allegedly persuaded investors to buy BitConnect Coin (BCC) through misleading schemes. Authorities said Kumbhani and his network controlled the platform and diverted funds for personal use, including real estate investments. The fraud operated between November 2016 and January 2018, affecting investors in India and several other countries.
A fake “Lending Programme” promised unusually high returns, attracting thousands of participants. However, the scheme later collapsed, exposing it as fraudulent. Investigators also uncovered links to a kidnapping and extortion racket connected to the scam.
Ponzi Scheme Based on Fake Trading Claims
BitConnect promoted a so-called “volatility trading bot” that allegedly generated high profits. The platform claimed investors could earn up to 40% monthly returns, with daily profits of around 1%, amounting to unrealistic annual gains.
However, investigations revealed that no real trading activity ever took place. Funds collected from new investors were transferred to wallets controlled by the accused. A global network of promoters recruited new members in exchange for commissions. In reality, the system operated as a Ponzi scheme, where money from new participants was used to pay earlier investors. When the scheme collapsed in 2018, billions of rupees were wiped out.
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Kidnapping and Extortion Linked to Scam Proceeds
The probe also uncovered a kidnapping plot involving Shailesh Bhatt and his associates. They allegedly abducted Piyush Savaliya and Dhaval Mavani and demanded repayment of their “lost” investments.
The accused extorted:
- 2,254 Bitcoins
- 11,000 Litecoins
- Rs 14.5 crore in cash
Nikunj Bhatt was allegedly involved in laundering part of these proceeds. He received around 266 Bitcoins through exchange accounts, of which 10.9 Bitcoins were attached by the ED.
The remaining funds were converted into Ethereum and USDT and routed through multiple wallets. Sanjay Kotadia allegedly received USD 2.3 million (around Rs 20.7 crore), while an additional USD 450,000 was transferred to him. Forensic analysis linked these transactions to the main accused.
Raids and Asset Seizure
On January 9, the ED conducted searches at five locations linked to the accused.
Officials seized:
- Mobile phones and digital devices
- Documents and storage drives
- Shares, mutual funds, cryptocurrencies, and cash
- Assets worth around Rs 19 crore were seized during the raids.
So far, total attachments in the case have reached Rs 2,170 crore, including properties and digital assets belonging to the accused. The agency said the recent arrests were made due to non-compliance with summons under Section 50 of PMLA.
Ongoing Probe
The BitConnect scam had shaken global cryptocurrency markets before its collapse in 2018. Regulators in the United States and several other countries had also initiated action against its founders.
Indian authorities have intensified their efforts in recent years to trace and recover proceeds of crime linked to the scheme. Officials said further arrests are possible, as more beneficiaries and facilitators are still under investigation.
While victims hope for partial recovery, the case serves as a reminder that promises of guaranteed high returns often mask serious financial fraud.
Written By Fazal Ul Vahab C H
