Crypto Scam

Divyesh Darji, the head of BitConnect India and the alleged kingpin of a cryptocurrency scam that duped investors out of billions of dollars, was arrested on Saturday by the Gujarat Criminal Investigation Department (CID) at the Delhi airport.

Inspector P G Narwade of CID crime of the Gujarat police said Darji was living in Dubai prior to the arrest. A look-out circular was issued against him. He was apprehended while on his way from the UAE city to Ahmedabad, India after the immigration department alerted the police.

Darji was one of the promoters of the BitConnect Ponzi scheme, along with Satish Kumbhani, Dhavl Mavani, Mahendra Chaudhari, and Suresh Gorasiya. The team allegedly siphoned off about US$12 billion from naive investors. Many high-profile names, including politicians, are also accused in the scam. Most of the promoters of this scheme fled abroad after the Gujarat police’s CID crime started the investigation.

“The company came into existence in 2016, and in 2017, it launched the BitConnect tokens. It remained active till January this year. It released 28 million BitConnect tokens, out of which 18 million tokens were sold to investors,” Narwade said, as quoted by the Financial Express. “The accused held seminars, events in India and other countries promising high interest on investment in BitConnect tokens.”

Ashish Bhatia, the director general of police (DGP) of CID crime of the Gujarat police, said the company was registered in the UK and had an office in Surat. It lured investors with 60% monthly interest and incentives in the form of “referrals interest.”

BitConnect-scheme

BitConnect scheme

The scam came to light in India after deceived BitConnect investor Shailesh Bahtt allegedly extorted cryptocurrencies and cash worth over Rs 155 crore (US$22 million) at gunpoint from Dhaval Mavani and Piyush Savaliya of BitConnect. Later, Bhatt and his business partner were allegedly kidnapped by policemen and extorted cryptocurrencies worth Rs 9 crore (US$1.2 million).

BitConnect, touted itself as a “self-regulating financial system,” used buzzwords and celebrities to lure investors to participate. These would “lend” funds in bitcoin to finance various projects. The funds would then be converted to BitConnect tokens.

BitConnect tokens were worth more than US$435 each in January, before plummeting to less than US$5 a month a later.

Trade Satoshi is the last cryptocurrency exchange platform that still trades BitConnect tokens. It plans to delist it in September.

BitConnect shut down on January 16th 2018.

The arrest of Darji comes just a few months after self-proclaimed “cryptocurrency guru and visionary,” Amit Bhardwaj was arrested for scamming investors out of Rs 2,000 crore (US$307 million).

Bhardwaj, who was on the run for almost a year, was arrested at the Bangkok airport on April 4th and later brought to Pune to face trial.