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The Enforcement Directorate (ED) has made its largest-ever cryptocurrency seizure, amounting to Rs 1,646 crore, in a massive money laundering investigation tied to a fraudulent investment scheme. Official sources reported that numerous depositors were duped under the pretense of securities investment.
Investigation and Seizures
The Ahmedabad office of the federal probe agency also seized Rs 13.50 lakh in cash, an SUV, and several digital devices following a fresh round of searches on Saturday. The case is linked to the fraudulent and unregistered sale of securities through the 'BitConnect lending program.'
The ED's investigation, under the Prevention of Money Laundering Act (PMLA), originates from an FIR filed by the Surat Police crime branch. The alleged fraud took place between November 2016 and January 2018, following demonetization.
Crypto Transactions and Dark Web Involvement
A specialized team of tech experts examined the intricate network of transactions conducted via multiple cryptocurrency wallets to trace their origins and controllers. Investigators discovered that many transactions were executed through the dark web to obscure their traceability.
The agency meticulously tracked numerous web wallets and gathered intelligence to identify the locations of digital devices containing the seized cryptocurrencies. The assets, worth Rs 1,646 crore, were transferred to a special crypto wallet controlled by the ED, marking the largest-ever seizure of virtual digital assets in an ongoing money laundering probe.
BitConnect’s Fraudulent Scheme
During the investigation, the ED found that BitConnect, an unincorporated organization, had established a worldwide network of promoters. These promoters were incentivized through commissions to attract investors.
To lure investors, BitConnect falsely claimed that deposits in cash and Bitcoin would be managed by a proprietary "volatility software trading bot," promising returns as high as 40% per month. Additionally, the promoters published fabricated returns on the BitConnect web portal, projecting an average gain of 1% per day, or approximately 3,700% annually.
However, the ED's probe revealed that these claims were fraudulent. Instead of investing funds in trading, BitConnect's operators siphoned off investors' money for personal gain, transferring the funds to their controlled digital wallets.
Ongoing Investigation and International Links
Previously, the ED had attached assets worth Rs 489 crore in connection to this case. Authorities also found that foreign nationals had invested in BitConnect, and the primary accused is under investigation by federal authorities in the United States.
The investigation is ongoing as authorities continue to uncover deeper layers of the fraudulent operation and identify further perpetrators involved in the massive scam.
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