ED Seizes INR 1,646 Cr in Assets Amid Global Crypto Scandal

Nitin Konde, Varun Bhardwaj

14 Feb 2025 — 2 min read

ED Seizes ₹1,646 Cr in Assets Linked to Global Crypto Scam

According to reports, the Enforcement Directorate (ED) made one of the largest seizures in a single search operation by an Indian agency, seizing assets valued at INR 1,646 Cr ($189.5 Mn). According to a media report, the operation was a component of a US-led probe into a $2.4 billion cryptocurrency "ponzi" scam that reportedly defrauded hundreds of investors across more than 40 nations. According to the report, which cited sources, the ED tracked Bitconnect founder and scandal mastermind Satish Kumbhani to Ahmedabad. Following his indictment in the scam by a US district court, where he was charged with operating a global Ponzi scheme under the guise of a Bitconnect loan scheme, Kumbhani fled into hiding.

What Next?

Kumbhani will soon be questioned by the ED and is probably going to be arrested, according to the report. There is a "look out circular" against him. The ED is seeking to return the proceeds of crime to the victims of the scandal, including overseas nationals, following the seizure of cryptocurrency assets on February 12. The BitConnect creator was charged by a grand jury in San Diego, California, in 2022 with "orchestrating" a global cryptocurrency Ponzi scam. In a court filing at the time, Richard Primoff, an attorney for the US Securities and Exchange Commission, stated that Kumbhani had moved from India to an unidentified address abroad.

Modus Operandi

In addition to running an unauthorised money transmission business and conspiring to commit international money laundering, Kumbhani was charged with conspiracy to commit wire fraud and price manipulation. Kumbhani asserted in 2016 that he had developed the BitConnect blockchain and started a lending operation with native tokens known as BitConnect Coins (BCC). According to reports, he tricked investors into funding his phoney cryptocurrency business by making unrealistically high returns. BitConnect's market capitalisation peaked at $3.4 billion during its heyday.

However, following cease-and-desist orders from North Carolina and Texas regulators, BitConnect shut down its exchange in January 2018. Glenn Arcaro, the director and promoter of BitConnect, entered a guilty plea in a federal court in September 2021 for his involvement in a large-scale conspiracy involving the cryptocurrency network.

The most recent development coincides with certain significant controversies that have recently rocked the cryptocurrency industry. A security breach at the cryptocurrency exchange WazirX occurred in July of last year, resulting in the theft of $234 million worth of cryptocurrencies. In the meantime, in October of last year, Delhi Police and cryptocurrency exchange Binance teamed up to uncover a sophisticated scam run by a bogus organisation called "M/s Goldcoat Solar." This resulted in several arrests and the confiscation of more than one lakh USDT in bitcoin assets.