According to a local news source ‘The Times Of India,’ BitConnect, which ceased its operations at the starting of this year, was an open-source digital currency investment program being run by the company as a Ponzi Scheme. The allegations were supported by the fact that the company used a multi-level referral system ‘MLM Schemes’ and promised an astronomical return on investors’ investments.
The U.S. states of Illinois and Arizona have requested the highest Investigation department in the country ‘CID’ to seize the property of the promoters, which are suspected in the raising of around more than 40,000 Crore Rupees (around $5.6 Bln) from several investors. Most of the funds were supposedly poured into the firm after the direction of imposing demonetization in the country.
According to the claims of the investigating department ‘CID,’ those who had invested in the virtual currencies with the help of the company after the demonetization are all suspected of black money laundering. Mentioning further the agency added that it’ll request the probe of such investors by the enforcement agencies and tax authorities.
Initially, this fraud pace was reported by an Indian Businessman Shailesh Bhatt, after his claim that he had been kidnapped and robbed with around $1.2 Mln price worth in BTC.
The CID mentioning further stated that:
“The investigation found that Bhatt had invested around $275,000 USD in a company named ‘BitConnect’ and when the firm shut out its operation back in January 2017, he kidnapped an official of the company, ‘Dhaval Mavani’, and extorted Bitcoins, Litecoins and cash worth of $25 Mln from him.”
By August, the Indian police arrested ‘Divyesh Darji’ for allegedly promoting BitConnect and scamming investors. Darji, a resident of Surat town, reportedly mentioned that he had been the head of the operation for BitConnect in India. The CID claims that employees at the BitCoinnect workplace in Surat admitted that the promoters had overall collected Millions of rupees from thousands of different investors.
Following the illicit activities of BitConnect, several users within the U.S. filed a case against the company, seeking compensation for their lost funds, reportedly amounting to around $771,000 USD. The suit alleges that the BitConnect tokens were unregistered securities based on a wide-ranging Ponzi scheme.