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India’s ED seizes $198 million in crypto linked to Bitconnect’s infamous Ponzi scheme. A global fraud, high returns promised, and digital assets hidden—here’s the full story.
India Seizes $198M in Crypto in Bitconnect Fraud Probe
India’s Directorate of Enforcement (ED) in Ahmedabad announced on Feb. 15 that it has seized cryptocurrencies worth Rs. 1,646 crore (approximately $190 million) in connection with the Bitconnect cryptocurrency fraud. The search operations, conducted on Feb. 11 and Feb. 15, were carried out under the Prevention of Money-Laundering Act (PMLA), 2002. According to officials:
During the search operations, proceeds of crime in the form of various cryptocurrencies worth Rs. 1646 Crore (approx.) were recovered and seized. In addition to the said cryptocurrencies, Rs.13,50,500 in cash, one car Lexus made and a number of digital devices have also been seized.
The ED’s investigation was based on First Information Reports (FIRs) registered by the Crime Investigation Department (CID) in Surat.
Investigators discovered that between November 2016 and January 2018, Bitconnect operated a fraudulent and unregistered securities offering called the “Lending Program.” The scheme attracted investors globally, including in India, by falsely promising high returns. The founder of Bitconnect built an international network of promoters who were rewarded with commissions.
The ED explained that the company claimed it used a “volatility software trading bot” to generate returns of up to 40% per month, with fictitious returns averaging 1% per day or approximately 3,700% annually. However, Indian officials noted that the accused did not invest the funds but instead diverted them to digital wallets under their control, adding:
By tracking numerous web wallets and gathering ground intelligence, ED was able to zero-in-on the wallets and the premises where the digital devices containing said crypto currencies were available.
Bitconnect collapsed in early 2018 after being exposed as a Ponzi scheme. U.S. authorities have also charged Bitconnect’s founder and top promoters with conspiracy to commit wire fraud and money laundering. Glenn Arcaro, the platform’s top U.S. promoter, was sentenced to 38 months in prison and ordered to pay over $17 million in restitution to victims worldwide. Meanwhile, Bitconnect’s founder, Satish Kumbhani, was indicted in February 2022, but his whereabouts remain unknown. Authorities continue efforts to recover funds and hold those responsible accountable for the $2.4 billion cryptocurrency fraud.
