Officials from two states in the United States have urged the Criminal Investigation Department (CID) in India to confiscate the property of promoters of Bitcoin (BTC) investment firm BitConnect.
This is according to a report on the Times of India.
BitConnect, which halted its operations earlier this year, was an open-source cryptocurrency and an investment program charged with being a Ponzi scheme. The allegations were founded on the multi-level referral system and pledges of exorbitant returns on customers’ investments.
The U.S. states of Illinois and Arizona are seeking for the CID to seize the property of the promoters, who are suspected of raising Rs 41,000 crore or an estimated $5.6 billion from investors. Most of the resources were reportedly poured into the company after the demonetization of high-value banknotes at the direction of the Modi government in 2016.
The CID said that “those who invested in this virtual currency company after demonetization are suspected of laundering black money.” The agency also added that it would request the probe of such investors by the enforcement directorate and income tax authorities.
The fraud scheme was first reported by businessman Shailesh Bhatt, who claimed that he had been abducted and robbed of Rs 9 crore or $1.2 million worth of BTC by local police.
The CID said:
“The investigation found that Bhatt had invested Rs 2 crore ($275,000) in BitConnect and after the company shut shop in January 2017, he kidnapped an employee of BitConnect, Dhaval Mavani, and extorted Bitcoins, Litecoins and cash worth Rs 155 crore ($25 million) from him.”
Towards the end of August, Indian police apprehended Divyesh Darji for allegedly promoting BitConnect and swindling investors. Darji, a resident of Surat city, reportedly claimed that he had been the India head of BitConnect. The CID claimed that staff at the BitCoinnect office in Surat confessed that promoters had overall amassed “crores [tens of millions] of rupees from thousands of investors.”
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