Divyesh Darji, the promoter of Bitconnect India, was apprehended by police officials at an airport in Delhi as he arrived from Dubai.
Darji and his accomplices allegedly made off with millions of dollars from Indian investors which got caught up in the Bitconnect scam. They targeted mostly Indian investors which were looking to buy cryptocurrency to secure their finances during the country’s demonetization movement.
Even though the Bitconnect company was registered in the UK, it supposedly conducted its operations from the Burj Khalifa tower in Dubai.
Most of the victims that were particularly affected by the Bitconnect scam were Indian investors. After the government demonetized all 500 and 1,000 rupee notes, India then proceeded to ban $10 and $20 bills. The latter move was done in an effort to curb the country’s black market growth. But these decisions generated cash shortages and great economic problems. It is also why many investors started looking into bitcoin and other cryptocurrencies.
And then there was Bitconnect, which promised to help investors protect and increase their assets in a time of economic uncertainty. Bitconnect marketed itself as the next bitcoin: being priced at a much lower value than bitcoin. Darji heavily endorsed the scam on social media and held lavish events across India. Investors were promised unrealistic monthly returns of 60%.
But Bitconnect was just another pyramid and Ponzi scheme. The whole scam was exposed in January 2018 and the company was shut down.
Since its collapse, many prominent Bitconnect members were arrested. Most of its promoters have apparently fled the country in January after news that Indian authorities were looking into the case surfaced.
Indian celebrities and politicians were also involved in the scam including names like Satish Kumbhani, Dhavl Mavani, and Suresh Gorasiya.
PG Nawade of the Gujarat police gave details on how the arrest went down in a statement given to the Financial Express:
“Darji was living in Dubai. A look-out circular was issued against him. The Immigration Department alerted us when he was on the way from Dubai to Ahmedabad, after which he was arrested today evening. The company came into existence in 2016, and in 2017, it launched the Bitconnect coin. It remained active till January this year. It released 2.80 crore coins, out of which 1.80 crore coins were sold to investors. The accused held seminars, events in India and other countries promising high interest — daily interest rate of 1 per cent — on investment in Bitconnect coins. The cost of one Bitconnect coin on January 16, 2018, when the company shut down, was USD 362.”
When Darji was arrested, the Gujarat police also confiscated 169 bitcoins and 8kg of gold from him.
Many Indian investors lost their life’s savings in the Bitconnect scam, and this arrest has probably given them some hope that justice will be enforced. Currently, there is still no information as to who was actually behind the company. Bitconnect’s unknown founders are still on the loose.