According to a local news source ‘The Times Of India,’ BitConnect,thatceased its operations in the starting of this year, wasan open sourcedigital currency investment program being ran by the company as a PonziScheme. The allegations weresupportedby the fact that the company used multi-level referral system ‘MLM Schemes’ and promised an astronomical returns on investors investments.
The U.S. states of Illinois and Arizonahave requested thehighest Investigation department in the country ‘CID’to seize the property of the promoters,which aresuspectedin the raising around more than40,000 Crore Rupees (around $5.6 Bln) from several investors. Most of the funds weresupposedlypoured into the firm after the direction of imposing demonetization in the country.
According to the claims of the investigating department ‘CID,’ thosewho hadinvested in thevirtual currencies with the help of the company after the demonetizationare allsuspectedof blackmoney laundering. Mentioning further the agency added thatit’llrequest the probe of such investors by theenforcement agenciesandtaxauthorities.
Initially, this fraudpacewasreportedbyan Indian BusinessmanShailesh Bhatt, after his claim that he had beenkidnappedand robbed with around $1.2 Mlnprice worthin BTC.
The CID mentioning further stated that:
“The investigation found that Bhatt hadinvested around$275,000 USD in a company named ‘BitConnect’ andwhen the firmshutout its operation backinJanuary2017, hekidnapped an officialof the company, ‘Dhaval Mavani’, and extorted Bitcoins, Litecoins andcash worth of $25 Mln from him.”
By August, the Indian policearrested‘Divyesh Darji’ for allegedly promoting BitConnect and scamming investors. Darji, a resident of Surattown, reportedlymentionedthat he had been the head of operation for BitConnect in India. TheCIDclaims thatemployeesat the BitCoinnectworkplacein Surat admitted that the promoters had overallcollected Millions of rupees from thousands of different investors.
Following theillicit activitiesof BitConnect,severalof userswithin theU.S. filed a case againstthe company, seeking compensation for their lost funds, reportedly amounting to around $771,000 USD. The suite alleges that the BitConnect tokens were unregistered securitiesbased ona wide-ranging Ponzischeme.