$3 Billion Scam of Bitcoin [BTC] and Bitconnect [BCC] Identified in India
India subcontinent is again at the center of one of the biggest scams carried out using Bitcoin (BTC). This particular scam has reportedly emerged in Surat, Gujarat and as per the reports the scam is around worth $3 billion which were scalped in the form of Bitcoins from the investors.
The scam originated after the Indian Prime Minister Narendra Modi on November 2016 declared that the biggest note in circulation would stop to be legal tender. This included denominations of INR 1000 and INR 500 notes. Many were left shocked by this sudden move of demonetization, leaving many without a way to subvert tax laws and gather black money.
As per Google Trends after this announcement there was an increase in searches like “how to convert black money to white money”, and generally related to money laundering. Soon non-tax-paying and corrupt Indian citizens found themselves shifting and relying on cryptocurrencies for storing their sizeable wealth.
Demonetization led to talk about Indians looking to buy Bitcoin at premiums of close to 25% the trading price in online chatrooms and trading desks. The Product Manager at U.Cash, Kiran Vaidya stated:
“After demonetization, we were watching India. We’d seen how bitcoin rose after the Greece economic crisis and similarly after things went south in Venezuela. The volumes were so high that it was obviously people who had the capacity to move markets.”
In February of this more clues were found out on uncovering of a much bigger scam. A property developer in Surat, Shailesh Bhatt made a complaint to Gujarat’s Home Minister about a group of policemen who tried kidnapping him and extorting 200 Bitcoin from him. The price of 200 Bitcoin at that time amounted to around $1.8 million. This led to an investigation which snowballed to uncovering evidence showing fraud in an “epic scale”, as per Gujarat’s Criminal Investigation Department.
The investigation led to 8 policemen being accused of the kidnap and extortion of Bhatt. This was planned by his associate, Kirit Paladiya with the help of Paladiya’s uncle, Nalin Kotadiya. A thing to note is that Kotadiya was a lawmaker in the Bhartiya Janata Party. At present, Paladiya is in jail under charges of abduction and extortion.
After further investigation, it was found out that Bhatt and his associates were among the group of people affected deeply by the BitConnect scam. They decided to find a way to get their money back from those who had stolen it from him. They went on to kidnap two BitConnect representatives in Surat and asked for a ransom of 2256 Bitcoin for their freedom. However, Bhatt’s associate Paladiya wasn’t satisfied and used the influential power of his uncle to betray Bhatt and extort the Bitcoin from him.
After pressing the charged against his former associates, Bhatt went underground. He, later on, refused to any form of wrongdoings putting everything on Paladiya. In his defense, he told the officer in charge that all Bitcoin transfers were handled by Paladiya as he wasn’t ‘tech-savvy’.
Asia director with political risk advisory Eurasia Group, Shailesh Kumar, said:
“If more names of politicians do come out, there could be a price to pay. The government will have to find the absconders and bring them back.”
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