ED arrests 2 in BitConnect crypto fraud case; Rs 2,170 crore assets attached

The Enforcement Directorate has arrested two persons in connection with the multi-crore BitConnect cryptocurrency fraud and a linked kidnapping-extortion case, officials said. So far, the ED has arrested key accused Shailesh Babulal Bhatt and attached or frozen assets worth approximately Rs 2,170 crore in the case.

Nikunj Pravinbhai Bhatt (33) of Surat and Sanjay Kanubhai Kotadia (49) of Mumbai were arrested under Section 19(1) of the Prevention of Money Laundering Act (PMLA), 2002. They were produced before a special PMLA court in Ahmedabad, which granted the agency four days of custodial remand.

The arrests form part of a wider money-laundering probe related to the BitConnectCoin scheme, one of the largest alleged crypto frauds to have targeted investors globally.

FIRs LED TO ED PROBE

The ED initiated its investigation based on two FIRs registered by the CID Crime Police Station, Surat, against Shailesh Babulal Bhatt, BitConnect founder Satish Kurjibhai Kumbhani and others.

According to the agency, the accused induced members of the public to invest in BitConnect Coin, which was owned and controlled by Kumbhani and his associates. The collected funds were allegedly siphoned off to acquire Bitcoins and immovable properties.

Between November 2016 and January 2018, BitConnect is accused of running a fraudulent and unregistered global cryptocurrency offering through its “Lending Programme”, targeting investors in India and abroad.

FAKE TRADING BOT, INFLATED RETURNS

The ED said BitConnect falsely claimed to use a proprietary “volatility trading bot” that could generate returns of up to 40 per cent per month. The platform allegedly displayed fictitious daily returns of about 1 per cent, amounting to nearly 3,700 per cent annually.

Investigators said investor funds were never used for trading but were diverted to digital wallets controlled by the accused and their associates. The scheme was promoted through a global network of agents who earned commissions for recruiting new investors.

KIDNAPPING AND CRYPTO EXTORTION

The second FIR relates to a kidnapping and extortion case in which Shailesh Babulal Bhatt and his associates allegedly abducted two persons — Piyush Savaliya and Dhaval Mavani — to recover their claimed investments.

The accused allegedly extorted 2,254 Bitcoins, 11,000 Litecoins and Rs 14.5 crore in cash in exchange for the release of one of the victims.

ROLE OF ARRESTED ACCUSED

During searches at five locations on January 9, the ED seized digital devices and documents and froze investments in shares, mutual funds, cryptocurrencies and cash worth around Rs 19 crore.

The agency said Nikunj Bhatt was an accomplice in the extortion and received at least 266 Bitcoins in two crypto exchange accounts, of which 10.9 Bitcoins have been attached. He allegedly laundered the remaining cryptocurrency through third-party accounts, converting it into Ethereum and USDT before transferring it across multiple wallets.

Investigators found that about USD 23 lakh (around Rs 20.7 crore) was routed to wallets linked to Sanjay Kotadia for crypto trading. Kotadia is also alleged to have received USD 4.5 lakh (about Rs 4.05 crore) directly from Shailesh Bhatt.

Forensic analysis of seized digital evidence established transactional links between the two accused, officials said.

ARRESTS AND ASSET ATTACHMENT

The ED said both accused were evasive during questioning and provided false or incomplete disclosures under Section 50 of the PMLA. Citing non-cooperation and the risk of tampering with evidence or fleeing, the agency arrested them.

So far, the ED has arrested key accused Shailesh Babulal Bhatt and attached or frozen assets worth approximately Rs 2,170 crore in the case. Further investigation is underway to trace additional proceeds of crime and identify other beneficiaries.

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