Indian law enforcement arrested a man suspected of kidnapping two employees of the defunct financial pyramid BitConnect and extorting $125 million in cryptocurrencies.
According to the investigation, Ahmedabad resident Shailesh Babulal Bhatt fell victim to the fraudulent scheme by purchasing the native coin of the BitConnect project. In an attempt to “recover his investment,” he, along with accomplices, kidnapped two employees of the scam project and extorted 2091 BTC, 11,000 LTC, and approximately $1.7 million (145 million Indian rupees) in exchange for their release.
Bhatt was arrested on August 13. He confessed to paying his accomplices $34 million (2.9 billion Indian rupees) for “their active participation.” This sum was spent on purchasing real estate, gold, and other assets.
Authorities seized various assets from the individuals involved, totaling $52 million (4.4 billion Indian rupees). The investigation is ongoing.
The cryptocurrency financial pyramid BitConnect operated from 2016 to 2018. Its collapse resulted in 4,000 people from 95 countries losing approximately $2.4 billion. An initiative group of victims filed a class-action lawsuit in the Southern District of Florida.
On February 22, 2022, U.S. authorities filed fraud charges in absentia against the project’s founder, Satish Kumbhani. The Indian police and the SEC also conducted investigations into him. Kumbhani’s whereabouts remain unknown.
BitConnect’s leading promoter in the U.S., Glenn Arcaro, pleaded guilty to fraud in September 2021. He was sentenced to 38 months in prison and ordered to return $24 million to investors.
In Australia, project consultant John Bigatton was found guilty of providing unlicensed financial services. He received a three-year good behavior bond and is barred from managing any business for five years.
In January 2023, the Federal District Court in San Diego ordered the distribution of $17 million among approximately 800 BitConnect victims.