Shailesh Babulal Bhatt, an investor in the now-defunct BitConnect Ponzi scheme, has been arrested by India’s Enforcement Directorate (ED) for kidnapping two employees of BitConnect founder Satish Kumbhani. Bhatt and his associates allegedly carried out the abductions to extort ransom payments as a way to recover losses they suffered from the scheme.
Bhatt and his accomplices targeted employees of the notorious BitConnect platform, which had tricked investors into purchasing and lending BitConnect Coins under the false promise of earning up to 1% in daily returns. The scheme, operational from 2016 to 2018, amassed $2.4 billion globally before collapsing. Bhatt extorted significant amounts of cryptocurrency and Indian Rupees from the kidnapped employees.
Bhatt’s arrest took place on August 13, 2023, after he appeared before a court in Ahmedabad. Investigations into the case began following two First Information Reports filed in 2022, while the original kidnapping occurred in 2017. Bhatt had been arrested shortly after the 2017 incident but has continued to face legal scrutiny.
Bhatt and his team extorted 2,091 Bitcoins, 11,000 Litecoins, and approximately $1.7 million in Indian Rupees from the BitConnect employees, with the total value of these assets reaching approximately $146.8 million. Bhatt’s accomplices reportedly used $34 million of the ransom to acquire properties, gold, and other assets. The ED has since seized $52 million worth of properties linked to the case under the Prevention of Money-Laundering Act.
BitConnect was a global Ponzi scheme that lured investors with the promise of high returns powered by a “trading bot” and “volatility software.” It ultimately paid early investors with funds from new participants, leading to its collapse after U.S. regulators issued cease-and-desist orders. While BitConnect’s founder, Satish Kumbhani, remains at large, other key promoters have been prosecuted. In July 2024, Australian regulators convicted John Louis Anthony Bigatton for unlicensed financial advising related to the scheme.
In a similar case, Malaysian police uncovered a crypto-related ransom incident involving the kidnapping of a Chinese national and a Malaysian woman, where $1.2 million in crypto was demanded as ransom.
Bhatt’s arrest sheds light on the continuing aftermath of the BitConnect Ponzi scheme, underscoring the lengths some investors have gone to recoup their losses and the broader risks associated with fraudulent crypto platforms.
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