{"id":1438,"date":"2018-09-22T10:52:53","date_gmt":"2018-09-22T14:52:53","guid":{"rendered":"https:\/\/www.silvermillerlaw.com\/?p=1438"},"modified":"2024-04-22T10:51:42","modified_gmt":"2024-04-22T10:51:42","slug":"exit-scam-wonderland-bitconnects-tentacles-texas-gujarat","status":"publish","type":"news_posts","link":"https:\/\/www.silvermillerlaw.com\/press\/in-the-news\/exit-scam-wonderland-bitconnects-tentacles-texas-gujarat\/","title":{"rendered":"Exit Scam in Wonderland: Bitconnect\u2019s Tentacles From Texas to Gujarat"},"content":{"rendered":"
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An American musical prelude<\/h2>\n

Bitconnect<\/a>, the now-defunct crypto lending and exchange platform that has been ousted as a ruinous\u00a0Ponzi scheme<\/a>, has memorably been compared by the Silver Miller firm to the fleeting 2011 Broadway musical<\/a>\u00a0\u201cWonderland,\u201d based on the dizzying impossibilities of Alice\u2019s adventures in Lewis Carroll\u2019s celebrated novel.<\/p>\n

Silver Miller\u2019s\u00a0first<\/a>\u00a0class action complaint was filed on behalf of six defrauded Bitconnect investors in late January, just weeks after the Texas Securities Commissioner\u00a0issued<\/a>\u00a0an\u00a0emergency cease-and-desist order<\/a>\u00a0against Bitconnect for the selling of unlicensed securities.<\/p>\n

The complaint unconventionally opened with the following lyrics:<\/p>\n

\u201cWelcome to Wonderland \/ Where everything you see \/ I mean from \u2018A\u2019 to \u2018Z\u2019 \/ Ain\u2019t what it seems to be. \/ Welcome to Wonderland \/ Set phasers up to stun \/ Turn off the lights when done \/ Good luck and thanks a ton \/ Ciao, baby, gotta run!\u201d<\/p>\n

In the ensuing months, the federal court for the Southern District of Florida has appointed two lead co-plaintiffs for the class action\u2019s\u00a0third amended<\/a>\u00a0complaint, who will represent all potential plaintiffs in the case. One of the lead plaintiffs, said to be domiciled in Dubai, alleges his out-of-pocket investment loss at Bitconnect totaled 150.28 Bitcoin (BTC<\/a>), valued at the time at over $1.6 million.<\/p>\n

If the musical allusions have sadly disappeared from the most recent court documents, the number of potential plaintiffs looks set to burgeon.\u00a0David Silver<\/a>\u00a0told Cointelegraph in an interview that the law firm \u201canticipate[s] thousands of people filing claims if and when this case gets certified and we hopefully recover assets to disperse.\u201d<\/p>\n

According to Silver, plaintiffs were duped into taking the Wonderland-like impossibilities of the Bitconnect looking glass for \u201cimprobable possibles\u201d and clung to the \u201csliver of a chance\u201d that the high-yield investment scheme was legit. As cited in Silver Miller court documents, Bitconnect described itself as an \u201call-in-one\u201d Bitcoin and crypto platform, where:<\/p>\n

\u201cIt is entirely possible to find the independence we all desire, in a community of like-minded, freedom-loving individuals who, like you, are seeking the possibility of income stability in a very unstable world.\u201d<\/p>\n

This purported \u201cincome stability\u201d amounted to the promise \u2014 regardless of the amount of the initial investment \u2014 of a one percent daily return, which Bitconnect alleged would be \u201cgenerated by its own proprietary trading bot and volatility software.\u201d According to this Wonderland algorithm, a $1,000 investment stood to return $50 million within three years of daily compounded interest, as the first Silver Miller complaint noted.<\/p>\n

Bitconnect is alleged to have run a global Ponzi investment scheme as of late 2016<\/strong>\u00a0that enlisted multi-level affiliate marketers through a referral program that rewarded them for luring investors to purchase Bitconnect native tokens (BCC) on the Bitconnect BCC exchange, using either Bitcoin or fiat currency.<\/p>\n

These investors were solicited to participate in the so-called Bitconnect lending program, pitched as an \u201copportunity\u201d for them to lend their BCCs back to Bitconnect, which the firm would then use its \u201ctrading bot\u201d to generate \u201cguaranteed\u201d profits on their behalf, of the aforementioned astronomical proportions. Those who successfully solicited further investors were promised even higher returns.<\/p>\n

It further marketed a Bitconnect staking program, in which investors were given the offer to hold their BCCs in the platform\u2019s Bitconnect-QT wallet as yet another means of pocketing hefty profits.<\/p>\n

While\u00a0Silver Miller\u2019s action represents the ongoing U.S.\u00a0private litigation<\/a>\u00a0against the scheme<\/strong>\u2014 parallel to which federal muscle has also been working \u2014 recent developments in India have exposed a murky web of incidents that taint the highest echelons of the country\u2019s political class.<\/p>\n

The case\u2019s corporate defendant, Bitconnect, while hiding behind a shadowy U.K. address, has wreaked havoc through its army of recruiters that range from viral American Youtubers \u2014 resulting in\u00a0Youtube\u2019s<\/a>\u00a0own\u00a0implication<\/a>\u00a0as a defendant in the Silver Miller class action \u2014 to shrewd promoters in the moneyed state of Gujarat, the home turf of India\u2019s current prime minister.<\/p>\n

At the fulcrum of the Indian chapter is the city of Surat,\u00a0known<\/a>\u00a0for its diamond moguls and textile export tycoons.\u00a0<\/strong>Cointelegraph spoke to Kashif Raza of the Indian crypto litigation duo \u2018Crypto Kanoon\u2019 to investigate the scandal; an ever-thickening plot of alleged kidnappings and extortions, which has led to the arrest of a former lawmaker from India\u2019s ruling party just this week.<\/p>\n

\u201cCuriouser and Curiouser!\u201d Cried Alice<\/h2>\n

If Wonderland is known for the Queen of Heart\u2019s imperious command to paint white roses red, in Modi\u2019s post-demonetization<\/a>\u00a0of India, Google trends showed a\u00a0startling spike<\/a>\u00a0in one particular search query that hoped for an equally dubious chromatic transformation: \u201chow to convert black money into white money.\u201d<\/p>\n

As part of Prime Minister Narendra Modi\u2019s attempts to clamp down on tax evasion, in November 2016, he announced the government would be invalidating 500 and 1,000 rupee bills \u2014 which\u00a0accounted<\/a>\u00a0for 86 percent of the currency in circulation at the time.<\/p>\n

\u201cBlack money\u201d is a term used to describe undeclared income that escapes taxes, and Modi gave Indians until Dec. 30, 2016 to deposit their soon-to-be-defunct high-denomination notes, whose sum total was worth a staggering 15 trillion Indian rupee ($208 billion).<\/p>\n

The subsequent panic reportedly saw some 45 billion rupee ($650 million) flow in to Gujarat\u2019s wealthy port city of Surat, to be hidden away in assets including cryptocurrencies, according to an accountant\u00a0interviewed<\/a>\u00a0by Bloomberg last month, who asked to remain anonymous.<\/p>\n

This was the\u00a0fertile soil<\/a>\u00a0in which Bitconnect\u2019s India chapter took root. And over the course of the next year, as Bitcoin\u00a0soared<\/a>\u00a0to all-time industry highs, so did the BCC token. But in January 2018, after receiving its first warnings from U.S. regulators, Bitconnect shuttered up shop, triggering a crash in the token, which\u00a0plummeted<\/a>\u00a0from its Dec. 29, 2017 high of $437 to almost zero.<\/p>\n

The subsequent crimes and misdemeanours of livid Bitconnect investors are alleged to have taken place in February, although they first came to the public\u2019s eye only in April.<\/p>\n

Malice in Surat<\/h2>\n

On\u00a0Feb. 23<\/strong>, a Surat-based builder by the name of\u00a0Shailesh Bhatt\u00a0<\/strong>charged into the office of Gujarat state home minister Pradipsinh Jadeja and\u00a0claimed that 10 Amreli-district cops had kidnapped and extorted him for 176 BTC<\/strong>,\u00a0worth<\/a>\u00a09.45 crore* rupee (around $1.31 million).<\/p>\n

* A crore rupee\u00a0denotes<\/a>\u00a010 million rupee and is equal to 100 lakh rupee in the Indian numbering system (1 lakh denotes 100,000 rupee)<\/em><\/p>\n

The band of 10 was alleged to have comprised not only rank-and-file constables, but to have included Superintendent (SP) Jagdish Patel, as well as local Crime Branch Inspector, Anant Patel.<\/p>\n

As a builder and \u201cbusinessman\u201d reportedly known to have a penchant for Bitcoin trading and other \u201cbusiness verticals,\u201d Bhatt is\u00a0said<\/a>\u00a0to have been among those who declared their hidden incomes under the Modi government\u2019s Income Declaration Scheme (IDS) after demonetization.<\/p>\n

On\u00a0Feb. 9<\/strong>, he\u00a0alleged<\/a>\u00a0that state Central Bureau of Investigation (CBI) officer Sunil Nair threatened him over the phone and summoned him to the Gandhinagar CBI office, where he was allegedly beaten in a \u2018torture room\u2019 and asked to pay 10 crore rupee ($1.38 million).<\/p>\n

Bhatt claimed he had been primed for the call by one of his business aides, Kirit Paladiya, who is\u00a0alleged<\/a>\u00a0to have warned him that local authorities \u2014 supposedly both the Enforcement Directorate (ED) and the CBI \u2014 had him under close watch for his dealings in crypto.<\/p>\n

After his initial confinement by officer Nair, Bhatt is said to have argued his ransom down to 5 crore rupee ($693,450), which is said to have been paid via a so-called \u2018hawala<\/a>\u2019 broker.<\/p>\n

Then, on\u00a0Feb. 11<\/strong>, Bhatt claimed that Paladiya called him for a meeting in Gandhinagar, where they were both abducted by a band of cops in official government vehicles near a fuel station and whisked off to Keshav Farm House at Chiloda.<\/p>\n

There, Bhatt alleged, “they beat me up inside a room and threatened to kill me in a fake encounter if I did not hand over my Bitcoins”:<\/p>\n

“Amreli SP Jagdish Patel and Amreli inspector Anant Patel were involved. I was forced to transfer 13 crore rupee [$1.8 million] in Bitcoins to Paladiya’s account.”<\/p>\n

The plot thickened. For not only were the cr\u00e8me-de-la-cr\u00e8me of state police implicated, but\u00a0Bhatt accused Paladiya himself of double-crossing him in cahoots with his influential uncle, a former Member of the Legislative Assembly (MLA) for the ruling Bharatiya Janata Party (BJP), Nalin Kotadiya:<\/strong><\/p>\n

“I contacted Paladiya post-demonetization in 2016 to invest my money. He advised me to invest in Bitcoins and knew about my investment.”<\/p>\n

He further claimed that Kotadiya himself pressured him into paying the ransom. More on Kotadiya later.<\/p>\n

By\u00a0April 9<\/strong>, the Gujarat\u2019s elite Criminal Investigation Department (CID) had filed a First Information Report (FIR) against the 10 implicated cops, even though Director General of Police (DGP) CID Ashish Bhatia\u00a0stated<\/a>\u00a0at the time that:<\/p>\n

\u201cThe FIR has been filed on the basis of evidence found by the team so far. In his application, Shailesh Bhatt had mentioned the transfer of 200 Bitcoins worth 12 crore rupee [$1.66 million] from the digital wallet of his business partner, Kirit Paladiya. Another 32 crore rupee [$4.4 million] were allegedly paid for their release from a farmhouse. Later, 78.5 lakh rupee [$108,872] were allegedly paid to get the Bitcoins back. All these transactions mentioned in the application could not be proven.\u201d<\/p>\n

Conspiratorial cops<\/h2>\n

On\u00a0July 20<\/strong>, the Indian Express\u00a0covered<\/a>\u00a0a chargesheet which the Gujarat CID is said to have filed before a sessions court in Ahmedabad the previous day. The chargesheet outlined how the now-jailed and suspended SP Jagdish Patel had allegedly been in \u201cconstant\u201d communication with his junior, Inspector Anant Patel, with\u00a0the band of cops alleged to have received 1.32 crore rupee ($1.83 million) in booty from Paladiya following Bhatt\u2019s abduction<\/strong>.<\/p>\n

As per the chargesheet, on\u00a0Feb. 16<\/strong>, Anant is alleged to have given 9,087,575 rupee ($125,797) to SP Jagdish, who sent this money to his relative, one Bhavesh Jagdish Patel, a resident of Thaltej, Ahmedabad. The money is said to have been delivered by Anant and two local crime branch (LCB) cops in government vehicles. At Bhavesh\u2019s house, the money was allegedly counted, with 1 lakh rupee ($1,387) deemed to be \u201cmissing\u201d:<\/p>\n

\u201cThe money was counted again and 10,000 rupee [$139] was found to be missing. Bhavesh then called Jagdish and told him about it, to which Jagdish said, \u2018No problem. You keep the bag that has 90 lakh rupee [$124,821].\u2019\u201d<\/p>\n

Then, when word broke of Bhatt\u2019s\u00a0Feb. 23<\/strong>\u00a0complaint at the Home Ministry, Jagdish is accused of contacting Anant and organizing for the booty to be moved from Bhavesh\u2019s house to a friend, one Hardrik Mahida.<\/p>\n

\u201cOn March 6, Jagdish Patel was in Ahmedabad. At that time, accused Anant Patel was trying to cover up his crime and also demanding money for legal expenses for himself and other accused policemen. The then Amreli district Superintendent of Police gave 40 lakh rupee ($55,476) to Anant Patel to cover up his role and also policemen of his department [\u2026] [Jagdish handed over] 40 lakh rupee to Anant Patel and his staff Vijay Vadher, Sanjay Padmani and Pratap Der on April 6 at Pakwan cross roads, Ahmedabad. Jagdish\u2019s presence has been captured in the CCTV footage.\u201d<\/p>\n

The chargesheet, citing further CCTV footage as evidence, then accused the suspended SP of approaching Bhatt\u2019s friend Dharmendrasinh Gohil\u2019s house at Pachchai village in Bhavnagar to \u2014 euphemistically \u2014 \u201creach a compromise.\u201d<\/p>\n

After this ploy allegedly failed, Jagish is said to have thrown \u201cmobile instruments and SIM cards into the Sabarmati river\u201d \u2014 the very devices that would have incriminated his scheming with the co-accused Anant and Ketan Patel.<\/p>\n

A wolf in sheep\u2019s clothing?<\/h2>\n

In parallel to emerging details of this quagmire of police corruption,\u00a0the now-infamous extortion case made an about-turn when Bhatt himself was\u00a0accused<\/a>\u00a0of an earlier \u2014 and even more explosive \u2014 extortion of a staggering 1.55 billion rupee ($215 million) worth of crypto and cash at gunpoint\u00a0<\/strong>\u2014 including around 2,400 BTC \u2014 from two colleagues of a local Bitconnect promoter, Satish Kumbhani.<\/p>\n

As CID\u2019s Bhatia has reportedly stated, Kumbhani of Surat \u201cfloated\u201d a company called Bitconnect and \u201clured people like Bhatt to invest for huge returns. Bhatt ended up investing 2 crore rupee ($277,380) in BitConnect [token]. However, its promoters shut shop in\u00a0January 2018\u00a0<\/strong>and went underground.\u201d<\/p>\n

In a press note, the CID is reported to have stated that Bhatt\u2019s misdemeanours were uncovered when its sleuths went on the trail of how he had himself acquired the hefty sum of Bitcoin of which he claimed to have been robbed.<\/p>\n

The sleuths uncovered two earlier kidnappings \u2014 this time allegedly masterminded by Bhatt himself \u2014 involving nine accomplices, which included the builder\u2019s nephew Nikunj Bhatt.<\/p>\n

In apparent vengeance against those responsible for the Bitconnect heist, Bhatt and nine others are said to have posed as local tax officers and kidnapped a small-time Bitconnect employee named Piyush Savaliya on Jan. 30. Savaliya is said to have been held hostage at gunpoint, also at a shadowy farmhouse \u2014 so apparently beloved by Gujarat\u2019s criminal underworld \u2014 but this time one located in Surat.<\/p>\n

When Savaliya claimed he was unable to avail the men of their desired crypto, according to Bhatia:<\/p>\n

\u201c[The next day, Feb. 1], Bhatt\u2019s men kidnapped Dhaval Mavani at gunpoint […] [who was] also attached with the bankrupt firm BitConnect. Bhatt\u2019s accomplices forced Mavani to transfer 2,256 Bitcoins, worth 131 crore rupee [$18.2 million] into their account. The builder and his accomplices also transferred another 166 Bitcoins, worth 9.64 crore rupee [$1.34 million] into their account.\u201d<\/p>\n

The CID\u2019s press release reportedly added that Bhatt and his cohorts extorted a further 14.50 crore rupee ($2.01 million) in cash, which was secured through a local \u2018angadia<\/a>\u2019 \u2014 an informal network of Gujarati couriers.<\/p>\n

Bhatt is reported to have distributed the spoils among his nine accomplices, keeping around 700 BTC for himself and allegedly asking his tech-savvy nephew, Nikunj, to make the transactions.<\/p>\n

When the sleuths tracked the beleaguered Savaliya down, he claimed Bhatt had paid him 34.50 lakh rupee ($47,848) to keep silent and to release a \u201cfalse\u201d statement denying the kidnappings.<\/strong>\u00a0Mavani, for his part, was reportedly warned never to be sighted in Gujarat again: Police sources\u00a0claim<\/a>\u00a0he has left the country.<\/p>\n

As the allegations against Bhatt\u2019s shady past surfaced, the builder himself absconded. Speaking to local media outlet The Quint, the builder\u2019s lawyer said:<\/p>\n

\u201cThe charges levied against him are false and part of a larger conspiracy. There is no Savaliya or Mavani; in fact, Mavani was not even in India when the alleged offence transpired. The police [are] fabricating the whole story about Savaliya getting 34 lakh rupee ($47,066) for staying mum.\u201d<\/p>\n

Nonetheless, both Nikunj Bhatt and a further alleged accomplice, Dilip Kanani, were\u00a0arrested<\/a>\u00a0in May on charges of kidnapping and extortion, with CID reportedly\u00a0recovering<\/a>\u00a0152 Bitcoins worth 8.5 crore rupee ($1.18 million) from the duo.<\/p>\n

Conspiracy, take two \u2014 this time, a failed one<\/h2>\n

Another chargesheet floating around, which was also filed by the Gujarat CID in July,\u00a0alleges<\/a>\u00a0that when the accused policeman themselves got wind of Bhatt\u2019s earlier crimes, they themselves met on Feb. 15 at a hotel in Ankleshwar in Surat to conspire to silence him and prevent him from lodging his complaint at the Home Ministry.<\/p>\n

They are then said to have redoubled their efforts\u00a0Feb. 21<\/strong>, when Inspector Patel, lawyer Ketan Patel, his brother Jatin Patel, Kirit Paladiya and an \u201cindependent witness\u201d Vishal Sakadsariya are said to have met at yet another hotel to further scheme about ways in which to prevent Bhatt from coming forward.<\/p>\n

The chargesheet alleges that Ketan and Anant Patel attempted to trace the vanished Mavani \u2014 even sending four fellow cops to pursue him all the way to Mumbai \u2014 in what emerged as being a false trail.<\/p>\n

Mavani\u2019s whereabouts are still unknown.<\/p>\n

At this point, you\u2019d be forgiven for losing track of the countless names and double-crossed co-conspirators allegedly embroiled in the case. As Times of India jocularly\u00a0reported<\/a>, the CID detectives faced a similar headache and have reportedly created monikers for the different \u201cprotagonists\u201d of the many-tentacled incident based on the \u201cunique passwords of their Bitcoin e-wallets or phones\u201d:<\/p>\n

\u201cWe identify Ketan Patel as \u201cLoq,\u201d and Shailesh Bhatt as \u201cChoco,\u201d a CID official is reported to have confessed.<\/p>\n

\u201cIcing on the cake\u201d<\/h2>\n

In Cointelegraph\u2019s correspondence with Raza Kashif, he sketched out\u00a0the political backdrop of the unfolding crypto scandal, with its tarnished cops, victims-alleged-perpetrators and even former BJP lawmakers accused of being behind-the-scenes puppeteers:<\/strong><\/p>\n

\u201cAs we know, General elections are due to be held in India in April or May 2019 to constitute the 17th Lok Sabha. The opposition parties in India are leaving no stone unturned to corner BJP.<\/p>\n

\u201cThe Indian National Congress (INC, often called Congress party) has been trying to prove that \u2018Demonetization\u2019 was a tactical blunder and [the] Bhartiya Janta Party (BJP) took this step to make their own black money into white money.<\/p>\n

\u201cThe Bitconnect scam proved to be the icing on the cake for the opposition parties, as the name of the main protagonists is a former BJP MLA and he has been arrested by the Ahemdabad crime branch recently.\u201d<\/p>\n

Kashif referred to the arrest of the aforementioned ex-Member for the Legislative Assembly for the BJP, Nalin Kotadiya, the uncle of Bhatt\u2019s allegedly duplicitous former aide, Kirit Paladiya.<\/p>\n

Kotadiya was\u00a0remanded<\/a>\u00a0in police custody just on\u00a0Sept. 10<\/strong>.<\/p>\n

Let\u2019s backtrack to the immediate aftermath, when Kotadiya was first tainted by Bhatt\u2019s brush.<\/p>\n

In late April, after the allegations of extortion and conspiracy, with the disgraced band of rogue Amreli cops against him had surfaced,\u00a0Kotadiya at first attempted to\u00a0hit back<\/a>, dismissing the claims as misinformation<\/strong>, with the bizarre defense that:<\/p>\n

\u201cI am a man of public life. I meet people and talk to them on the phone. It does not mean I am involved in criminal acts with the people I meet or talk to on the phone.\u201d<\/p>\n

Kotadiya more pointedly drew attention to the fact that the alleged BTC transfers remained to be proven, quipping that \u201cif the Bitcoins were not transferred, the question that arises is where the money came from.\u201d He claimed that SP Jagdish Patel was being \u201cpressured\u201d to implicate him in the case and even more explosively that:<\/p>\n

\u201cBhatt accepted that he was investing money from people affiliated with political parties. To protect them, attempts are being made to fix me in the case.\u201d<\/p>\n

He then circulated a WhatsApp video,\u00a0reposted<\/a>\u00a0on Youtube in late April, in which, attired in pink, he claimed he had duly informed authorities about the Bitcoin heist and attributed the full blame for the extortion scandal and conspiracy to Bhatt.<\/p>\n

As one alleged conspiratorial mastermind accused another of the selfsame, Kotadiya moreover threatened to leak evidence that would implicate even more local politicians in the scandal.<\/strong><\/p>\n

By\u00a0mid-May<\/strong>, despite Kotadiya\u2019s protestations, his failure to turn himself in led a local Ahmedabad court to\u00a0issue<\/a>\u00a0an arrest warrant against him. The CID\u2019s plea reportedly alleged that the accused former-BJP figure had evaded the unit\u2019s clutches:<\/p>\n

\u201cThere is material evidence substantiating the allegation of [crimes] against Kotadiya. It has also emerged from the record that though summons were issued twice, Kotadiya, despite promising cooperation, did not present himself before the investigating agency.\u201d<\/p>\n

The CID plea alleged that in early May, Kotadiya had sent the agency a fax saying he would appear before them on May 12, but then failed to do so. On\u00a0May 7<\/strong>, he was also\u00a0reported<\/a>\u00a0to have released a press statement claiming he was being \u201cframed by the conspirators.\u201d But CID\u2019s plea is said to have pressed on, stating that:<\/p>\n

\u201cWe have concrete evidence against Kotadiya. He is a politically influential person. His evading arrest could be could be an attempt to delay the investigation and create hindrances to it.\u201d<\/p>\n

Meanwhile,\u00a0May 4<\/strong>\u00a0saw the\u00a0arrest<\/a>\u00a0of Kirit Paldiya, Bhatt\u2019s accused former aide and Kotadiya\u2019s nephew. His interrogation is reported to have revealed that Paladiya \u2014 in complicity with Kotadiya, the Amreli police SP and inspector, and lawyer Ketan Patel and his brother \u2014 had plotted to apportion the extorted Bitcoin spoils between them, allegedly reserving 15 percent to be split between Kotadiya, the lawyer, and his brother, and 15 percent to be split between the police officers.<\/p>\n

Kotadiya himself is alleged to have received 66 lakh rupee ($91,535) \u2014 of which Paladiya is said to have given 35 lakh rupee ($48,540) in total to two family members through a Surat-based angadia firm. 25 lakh rupee ($34,672) of this was said to have been recovered by CID officials at the time.<\/p>\n

As Kotadiya himself remained underground, by mid-June, an Ahmedabad sessions judge\u00a0declared<\/a>Kotadiya a “proclaimed offender” (absconder) under section 82 of the Code of Criminal Procedure (CrPC ) in response to an application by the CID and asked him to appear before the court within 30 days.<\/p>\n

Scathing news reports at the time\u00a0pointed<\/a>\u00a0to Kotadiya\u2019s political background, as well as characterizing him as a \u201cleader\u201d of the Patidar caste, a socio-economically prominent lineage within Gujarati society.<\/p>\n

Nabbed \u201cfast asleep\u201d on a construction site<\/h2>\n

Just last week, Kotadiya\u2019s time was finally up.<\/strong><\/p>\n

On\u00a0Sept. 10<\/strong>, the Times of India\u00a0reported<\/a>\u00a0that the ex-MLA for the BJP had been nabbed after four months in hiding.\u00a0He was reportedly found \u201cfast asleep\u201d on the second floor of the under-construction railway quarters in Amalner, in Dhule, Maharashtra.<\/strong><\/p>\n

He is alleged to have been hiding out there with laborers for the past two months, according to Deepan Bhadran, deputy commissioner of police for the Ahmedabad crime branch. The Times further claims that Kotadiya had eschewed using mobile phones to make sure he was off-grid, using relatives\u2019 and other borrowed cars to travel between locations. A crime branch source is quoted as saying:<\/p>\n

\u201cWhen we [eventually] found him, he was sleeping on a mattress and there was just an earthen pot of water in the room.\u201d<\/p>\n

An Amreli-born contractor at the Amalner railway quarters is said to have first noticed him, giving the golden tip-off.<\/p>\n

Opposition intrigues<\/h2>\n

As Raza Kashif noted, the BJP\u2019s embroilment has been a political gold mine for the opposition party, the Indian National Congress (INC).<\/p>\n

In\u00a0early July<\/strong>, senior congressional leader Shaktisinh Gohil\u00a0alleged<\/a>\u00a0that\u00a0the \u201cmega Bitcoin scam\u201d was being used to cover-up shifty conversions of black into white money by the members of the majority BJP party.<\/strong><\/p>\n

As Kashif wrote in his correspondence with Cointelegraph, Gohil claimed that the Gujarat scam had emerged as involving \u201cmore than $726 million (5,000 crore rupee) […] with some reports pegging the figure at $12.7 billion (88,000 crore rupee).\u201d<\/p>\n

Gohil used the case for all the political mileage he could muster, demanding a Supreme Court-monitored investigation into the matter:<\/p>\n

\u201cThe finger of suspicion of this massive scam of illegal cryptocurrency directly points to several top Bharatiya Janata Party leaders and a mastermind \u2014 an absconding BJP leader and former MLA Nalin Kotadiya.\u201d<\/p>\n

As the Deccan Herald bitingly\u00a0put<\/a>\u00a0it, Gohil alleged that \u201cextortion of crypto using government authorities at the behest of top BJP leaders in Gujarat has become a norm,\u201d claiming that \u201cpolitical pressure\u201d had muscled in on the local CID to hush the case up and launch the subsequent complaint against the Surat builder:<\/p>\n

\u201cInstead of [Bhatt] being the complainant in the first case, the CID at the behest of MoS Home made the police the complainant [\u2026] Who are the top BJP leaders against whom Kotadiya has damning evidence? We demand an impartial Supreme Court-monitored judicial investigation.\u201d<\/p>\n

Gohil\u2019s allegations further claimed the Bitcoin had been widely used to carry out \u201cillegal hawala transactions\u201d post-demonetization, something he implied would not have surfaced were it not for the scandal first unearthed by Mr. Bhatt.<\/p>\n

As Kashif outlined in his correspondence, Gohil drew upon the full extent of the alleged Bitconnect scandal \u2014 which extends well beyond the web of alleged extortions and kidnappings we have mostly been tracing so far:<\/p>\n

\u201c[News of the Bitconnect scam] transmitted a shockwave in the country at a time when the nation was already trying to recover from India\u2019s biggest\u00a0bank fraud<\/a>\u00a0case of $2 billion (over 13,000 crore rupee), a fraud [that had been] planned and executed by [diamantaire] Nirav Modi and his uncle Mehul Choksi. The Bitconnect fraud is six times bigger than the [aforementioned] bank fraud, which took all the headlines in the Indian media.\u201d<\/p>\n

As the Times of India has\u00a0reported<\/a>, tracing the full extent of Bitconnect\u2019s tentacles in India \u2014 by which we mean pointing to a figure less wildly obscure than\u00a0Gohil\u2019s benchmark bracket of anywhere between $726 million and $12.7 billion\u00a0<\/strong>\u2014 brings a unique hurdle, in that many of its investors are accused of laundering their \u201cblack\u201d cash into the scam post-demonetization.<\/p>\n

Even after Bitconnect scrammed late January \u2014 leaving its defrauded investors wallowing in now-worthless tokens \u2014 the CID\u2019s Bhatia told the Times that the bureau has received few complaints, allegedly because so much black money is thought to have been siphoned into the the scheme.<\/p>\n

While the Times itself considers that the Bitconnect swindle may indeed have \u201csiphoned off more money than Nirav [Modi\u2018s banking fraud],\u201d Bhatia stressed:<\/p>\n

\u201cSo far, we have received complaints for cheating worth 1.14 crore rupee ($158,106).\u201d<\/p>\n

Ciao baby, gotta run!<\/h2>\n

So what of the Bitconnect promoters themselves? Has the protective cloak of black cash and the newsworthy distractions of lurid kidnappings and extortions really allowed them to get away scot-free?<\/p>\n

Last month<\/strong>, police finally\u00a0arrested<\/a>\u00a0a suspect, Divyesh Darji, who is said to have held \u201cheld seminars [and] events in India and other countries\u201d promoting the Wonderland promises of Bitconnect.<\/strong>\u00a0Darji, a resident of Surat, had reportedly already been issued with a look-out circular and was arrested on Aug. 18 in the Delhi airport, after a tip-off from local immigration services.<\/p>\n

In his interview with Cointelegraph, Raza Kashif described Darji as a local and respected \u201cinfluencer,\u201d who enjoyed a number of high-profile and esteemed local connections, which he presumably made excellent use of to propagate the Bitconnect affair.<\/p>\n

Darji\u2019s still-active\u00a0LinkedIn profile<\/a>\u00a0claims \u2014 in somewhat shrill ALL CAPS \u2014 that:<\/p>\n

\u201cI AM HAVING DEGREE OF M.COM. LL.B., B.ED., N.D. & HAD EXPERIENCE OF TEACHING +2 STUDENT & COLLEGE FOR 25 YEARS. I AM GOOD NET WORKER AND HAVING GOOD LEADERSHIP QUALITIES. RIGHT NOW I AM HAVING ENOUGH KNOWLEDGE ABOUT CRYPTO CURRENCY AND BITCOIN AND MAKING WEALTH THROUGH THAT [sic].\u201d<\/p>\n

A recent Times\u00a0article<\/a>\u00a0cites CID crime officials as alleging that Darji enjoyed \u201c10 percent commission\u201d on investments he brought in:<\/p>\n

\u201cHe was fluent in English and ran several social welfare programs. He had a big following and Khumbani hence roped him in [\u2026] Darji had brought investments of 4,100 crore rupee [around $567.6 million], while the total amount invested in Bitconnect could be around 41,000 crore rupee [around $5.6 billion].\u201d<\/p>\n

As for Satish Kumbhani, he is reported to still be absconding. A senior CID crime officer is quoted by the Times as saying that the unit has \u201cbegun the process of getting a warrant issued against [him] and will then press for a red-corner notice (RCN)\u201d to trace him:<\/p>\n

\u201cKumbhani was tracked down to South Korea some time ago, but by the time we could react, he had flown back to Dubai. He supposedly handled the worldwide operations of the company and may have possession of a large amount of money in Bitcoins, which belongs to investors.\u201d<\/p>\n

Meanwhile, the\u00a0U.S.<\/a>\u00a0states of Illinois and Arizona\u00a0implored<\/a>\u00a0the CID\u00a0last week<\/strong>\u00a0to seize the property of the Gujarat Bitconnect promoters, the outcome of which remains to be seen.<\/p>\n

The aftermath?<\/h2>\n

As Raza shrewdly noted,\u00a0the INC has to date called four press conferences in response to the Bitconnect-related scandals, capitalizing on its potential to tarnish the BJP ahead of the forthcoming elections.<\/strong>\u00a0In the wake of multiple high-profile scandals, he added that:<\/p>\n

\u201cBack-to-back in the last five months, the magnitude of [a\u00a0string<\/a>\u00a0of]\u00a0frauds<\/a>\u00a0has come to 1 lakh crores rupee [around $13.87 billion]. For a developing country like India to face scams of this magnitude, [it] has shaken people\u2019s confidence in the system.\u201d<\/p>\n

Raza noted that news of the Bitconnect-related extortions broke\u00a0after<\/em>\u00a0the Reserve Bank of India\u2019s (RBI) notorious\u00a0circular<\/a>\u00a0directing all banks to extract themselves from relationships with crypto exchanges and traders had already been issued on\u00a0April 5<\/strong>.<\/p>\n

But Raza nonetheless stressed:<\/p>\n

\u201cNews like this makes life tougher for the average crypto trader in India [\u2026] the opposition party [INC] is opposing cryptocurrency now, because they have said that the ruling party used crypto to make their black money white. Now, if they come into power, they will not positively regulate crypto, because if the current party [BJP] goes into opposition, they will turn around and say that \u2018once upon a time, you used to trash us for our involvement in crypto, and now you yourselves are regulating it!\u2019 So this is not a good sign actually.\u201d<\/p>\n

In his correspondence, he added that as they bide their time until the next date of hearings devoted to the RBI restrictions, India\u2019s crypto exchanges and traders have\u00a0found<\/a>\u00a0their \u201cmessiah\u201d in the \u201cform of the p2p model\u201d:<\/p>\n

\u201cTimely regulation will help curb these scams to mushroom in India. The main protagonists, in this case, took the advantage of \u2018fear\u2019 and \u2018negativity\u2019 surrounding this industry in India. Possession of \u2018Bitcoin\u2019 is not illegal in India and most of the exchanges in India are self-regulated and follow stricter norms on KYC than banks.<\/p>\n

\u201cThere is a huge challenge in India when you approach a police station to file a complaint against a Bitcoin fraud, as there is a high probability that you might be sent back without [them] even listening to your complaint. The fraudsters know this fact and they take maximum advantage of looting the general public in the name of high-return promises.\u201d<\/p>\n

As of press time, Shailesh\u2019s Bhatt\u2019s whereabouts remain unknown. With Kotadiya still remanded in custody,\u00a0the case is poised to send further shockwaves through the crypto community and to provide further grist to the mill of India\u2019s opposition politicians.<\/strong><\/p>\n

Coda<\/h2>\n

As the final scores in Bitconnect\u2019s Gujarat chapter remain to be settled, globally, the scandal has meanwhile bequeathed to us one of the most jarring memes in industry history. Here is a\u00a0viral<\/a>video of one Carlos Matos, a Bitconnect recruiter born in the Bronx who \u201cserenaded\u201d the audience at the platform\u2019s first annual ceremony in back in 2017, in Pattay, Thailand. Click \u2018play\u2019 at your peril.<\/p>\n