Indian state Gujarat police’s Crime Investigation Department(CID), during the process of investigating the second phase of Bitcoin case with a probe against Surat-based realtor Shailesh Bhatt for coercion of 2000-plus Bitcoins from promoters of Bitconnect, has unboxed the operational methodology of Bitconnect firm. The investigating agency has also started a probe into the digital wallets and bank accounts associated with the firm.
Indian news outlet, The Times of India reported that CID officials, questioning of Nikunj Bhatt, Shailesh Bhatt’s nephew, exposed how the cryptocurrency exchange functioned. The firm was run in Surat by Divyesh Darji and Satish Kumbhani whereas Dhaval Mavani was looking after transactions. Bitconnect has its registered office in London in the UK. Primary examination, however, has unveiled that the address was just a front and there is no office on the said address. CID has seized 12 Bitcoins from Nikunj out of the 2,000-plus Bitcoins. The Bitcoins recovered so far in the first phase, will be converted into Indian rupees and will be transferred to a nationalized bank.
A CID official lended insight on the firm:
Apart from India, the firm has its presence in Indonesia, Vietnam, Hong Kong, Singapore and the US. We have identified a few accounts associated with the transactions and have intimated the respective banks about it.
Speaking about the functioning of the firm, the officials revealed that the promoters were active in sale and purchase of cryptocurrency since 2016 where they aggressively pushed Bitcoins as a good investment choice in Diamond City and elsewhere. The firm is speculated to have formalized at the beginning of 2017 and soon after they started Ponzi scheme of very high returns on investment.
The promoters used to mention a special software that used to decide on low and high points of Bitcoin for purchase and sale respectively. The difference used to be earning and the firm had promised 365% annual return or 1% daily,” said an investigating official.
The company reportedly had investment slabs to further lure investors. For example, if a person invested between $1,000 and $5,000, an extra 0.1 percent was added to his earning. Likewise, the extra incentive increased with each slab, with the largest slab offering 0.25 percent extra returns per day.
Interestingly, despite India’s resistance towards bitcoin and other cryptocurrencies, the CID said that it shall convert the recovered bitcoins into Indian Rupees and store them with the country’s central bank.