India Seizes $190M in Crypto Linked to BitConnect Ponzi Scheme

Indian authorities have reportedly seized crypto assets worth approximately $190 million linked to the 2018 BitConnect Ponzi scheme, according to a report by the Indian Express. The Enforcement Directorate (ED), the agency responsible for enforcing economic laws and combating financial crimes in India, conducted searches in the state of Gujarat on February 11th and 15th, seizing Rs 1,646 crore (nearly $190 million) in crypto assets, along with Rs 1.35 million ($15,550), an SUV, and digital devices.

The ED investigation revealed that the BitConnect scheme, which operated from November 2016 to January 2018, defrauded investors worldwide, including those in India. The scheme's co-founder, Satish Kumbhani, allegedly established a network of promoters who received commissions for enticing investors to deposit cash and Bitcoin (BTC) into the purported lending program. The promoters also posted fictitious information on the BitConnect web portal, claiming an average daily return of 1% or about 3,700% per year.

The ED alleges that despite BitConnect's claims of generating up to 40% monthly returns using a proprietary trading bot, the invested funds were not used for trading but were deposited into digital wallets controlled by the scheme's perpetrators. The crypto wallets were used to carry out transactions through the dark web, making them difficult to trace. However, the agency was able to identify the wallets and the location of the devices holding the cryptocurrencies by following on-chain transactions and gathering ground intelligence.