Police Arrest Alleged India Head of Now-Defunct Bitconnect Scam

Indian police have arrested a man who was allegedly involved in promoting the Bitconnect investment scam, Financial Express reported August 18.

The suspect, Divyesh Darji, is said to have been the India head of Bitconnect, the high-yield investment program that ceased its operations in January 2018 after coming under scrutiny for appearing to be a fraudulent Ponzi scheme.

"[Bitconnect] came into existence in 2016, and in 2017, it launched the BitConnect [BCC] coin.

The accused held seminars, events in India and other countries promising high interest - daily interest rate of 1 per cent - on investment in BitConnect coins.

Narwade added that the cost of one BCC coin on January 16, 2018 - the date on which Bitcoinnect formally closed its operations - was $362. According to Financial Express, a recently filed Freedom of Information Report shows that this is the third case under investigation by the Surat unit of CID. Local promoters of Bitconnect are alleged to have fled with 1.14 crore rupees worth of Bitcoin from one investor.

As it subsequently emerged, Bhatt had himself been implicated in the alleged extortion of 1.55 billion rupees' worth of crypto and cash at gunpoint - including 2,400 bitcoins - from two accomplices of another local Bitconnect promoter, Satish Kumbhani.

Bhatt, himself a Bitconnect investor, had reportedly held Kumbhani responsible for the loss of his own funds.

In the midst of the CID's investigations into this web of incidents, Bitconnect suddenly ceased its operations, meaning that scores of investors were no longer able to redeem or trade their BCC holdings.

Just days later, on Jan. 4, the state of Texas issued a cease and desist order against BitConnect for the selling of unlicensed securities, triggering a crash of the BCC token and the platform's closure.

Former BitConnect investors have been pursuing a class action lawsuit seeking compensation from the company.