Bitcoin extortion case: CID investigation exposes Rs 1,500-cr scam

A CID investigation in a case — in which a Surat-based builder was kidnapped and 176 bitcoins were extorted — has exposed a Rs 1,500-crore bitcoin scam.

The investigation has linked the case to the Rs 1500-crore scam of the bitconnect coin, where around more than 25,000 bitcoins of investors were duped by the company and it was shut down.

During a probe into the 176 bitcoin case, in which Shailesh Bhatt was kidnapped and his bitcoins were extorted, the CID officials had started a parallel investigation to find out the source of Bhatt's bitcoins. They found that between January 30 and February 1, Bhatt and his associate had kidnapped bitconnect investment company Admin Dhaval Mavani and Piyush Savaliya, an employee of the company, and had extorted 2,256 bitcoins, 11,000 litecoins and Rs14.50 crore from them.

Further investigations revealed that Bitconnect Investment company was initiated by Satish Khumbhani, a native of Amreli, and was earlier based in the UK. CID officers said Khumbhani had launched the bitconnect coin through the Initial Coin Offering where he had started a scheme in December 2016.

The company had guaranteed investors up to 40% return per month. BitConnect followed a four-tier investment system based on the sum of the initial deposit, the more cash you put down, the bigger and faster profits you could rake in. Which also made it somewhat akin to a pyramid scheme.

As per officers, the value of the bitconnect coin went up to $445 in two years from $5 to $6. In January 2018, the company abruptly announced it was shutting down its lending and exchange service and duped its investors.

The investors' money was taken by the Khumbhani and he also distributed it among his more than 10 agents in Surat and then he fled away from the country. The 10 agents included Dhaval Mavani also, who was the Administrator of the company and software engineer, who also got a major part. As per CID officials, it is believed that Mavani had a possession of around more than 25,000 bitcoins.

Aashish Bhatia, DGP of CID Crime, said, "This is when the Shailesh Bhatt's involvement come, he had also invested Rs2crore in the bitconnect. When he came to know the bitconnect company got shut down and he was duped. He made a plan to kidnap Mavani after he came to know about the bitcoins and extorted Rs155Crore from him which included 2256 bitcoins, 11000 Litecoins and Rs14.50Crore cash."