Authorities in Arizona and Illinois reached out to India’s Criminal Investigation Department (CID) and requested that officials in Gujarat “seize the property of the promoters of a cryptocurrency investment firm, Bitconnect.” The platform’s promoters are “suspected to have made off with Rs 41,000 core [~5.66 billion USD] of investors’ money.”
The Times of India publicized the matter and quoted CID officials as stating:
“Authorities of the US states of Illinois and Arizona wrote to us asking us to seize the property of the promoters of Bitconnect, as citizens of these states have invested in the company and lost money.”
CID investigators reported that two Bitconnect promoters, Satish Kumbhani and Divyesh Darji started crypto operations in December 2016 after the company demonetized. Investors then transferred BTC to the firm and received “bitconnect coins in return, which they could trade and on which they received interest.” The publication elaborated that the promoters were able to attract thousands of investors by promising them an 800% return per annum on investments.
Darji received a ten percent commission on investments he brought in. As the CID explains,
“He was fluent in English and ran several social welfare programs. He had a big following and Kumbhani hence roped him in.” Further, “Darji had brought in investments of Rs 4,100 crore [~566 million USD] while the total amount invested in Bitconnect could be around Rs 41,000 core.”
The CID continued,
“[a]t the time, one bitconnect coin was wroth about $360 and people invested their bitcoins due to the attractive returns promised.”
At this point, CID officials have arrested Darji at the Dehli airport as he was returning from Dubai. Concerning Kumbhani, a senior CID official stated,
“We have began the processes of getting a warrant issued against Kumbhani and will then press for a red-corner notice (RCN) to track him down.”
Interpol issues the RCH at the request of a member state to urge the member state to detain or arrest an accused.
The CID further added,
“Kumbhani was tracked down to South Korea some time ago, but by the time we could react, he had flown back to Dubai. He supposedly handled the worldwide operations of the company and may have possession of a large amount of money in bitcoins, which belongs to investors.”