Bitcoin investment scam in Guj could be worth Rs 500 cr: CID

Investors in Gujarat may have lost over Rs 500 crore in an alleged fraudulent scheme floated by the promoters of BitConnect, a cryptocurrency platform which shut down earlier this year, police today said.

Director General, Criminal Investigation Department (CID) Ashish Bhatia said that many of the victims were yet to come forward.

"We have received only one complaint of Rs 1.14 crore at present. Many victims told us they want to lodge complaint but they have not come forward. They might be having the fear of Income Tax department (questioning the source of money). So we do not have the exact figure," Bhatia told PTI.

"Many from Gujarat, mostly from Surat, had invested in the scheme. If we add up the money extorted by Shailesh Bhatt, the figure may come to over Rs 500 crore," he said.

BitConnect promoters had issued a cryptocurrency token, "BCC", and floated a global trading and lending platform for investors in 2016.

Cryptocurrencies like 'Bitcoin' are digital currencies which are not authorised or regulated by any central bank including the RBI.

As per an FIR filed three days ago, the third in the case being probed by the Surat unit of CID so far, the promoters of BitConnect disappeared after collecting Bitcoins worth Rs 1.14 crore from one investor.

But the CID claimed in a press release that employees working at BitConnect's Surat office admitted that promoters had collected "crores of rupees from thousands of investors".

The alleged scam came to light after Surat-based builder Shailesh Bhatt alleged that some policemen from Amreli district kidnapped him and his business partner and extorted Bitcoins worth Rs 9 crore from them.

After the arrest of several policemen by the CID, the case took a twist in May, when the agency registered a complaint against Bhatt himself for allegedly extorting Bitcoins and cash worth over Rs 155 crore at gunpoint from two men who worked for Satish Kumbhani, one of the promoters of BitConnect.

Bhatt too had invested in BitConnect using his Bitcoins, but he lost them when Kumbhani and others wound up the firm. Subsequently, Bhatt and his accomplices abducted Kumbhani's former employees and forced them to transfer over 2,400 Bitcoins into Bhatt's digital 'wallet' (account), the CID alleged.

When this information emerged, Kumbhani and other BitConnect promoters came under the CID's scanner.

It is alleged that BitConnect, started in 2016, lured investors by promising to double their Bitcoins in 100 days.

Kumbhani allegedly took only Bitcoins and not real money, and issued Bitcoin 'tokens' called "BCC" to investors. At one point, the price of one token was over USD 360 in the cryptocurrency market, the CID said.

In January this year, Kumbhani and other promoters suddenly closed the exchange and became untraceable. Investors lost money as they could no longer encash or trade their BCC tokens, the CID said.

Nobody has been arrested in the alleged scam yet.