Surat BitCoin Scam: Amreli PI Anant Patel & Other

Cryptokidnapping, or how to lose $3 billion of bitcoin in India

Investigators across Gujarat and in the Indian capital of New Delhi say complaints about crypto frauds began pouring in after the U.S. cease-and-desist letters.
Accusations of tax evasion and police corruption, a kidnapper who was kidnapped, a fugitive politician, and billions in bitcoin lost. This is crypto-trading Gujarat-style.
The ingredients are part of an investigation in Indian Prime Minister Narendra Modi’s home state into allegations that investors poured cash into a bitcoin-based Ponzi scheme that could exceed the country’s largest banking scandal. The fallout extends as far as Texas and has embroiled a former lawmaker, tarnishing Modi’s ruling party months before an election.
It began in February, when property developer Shailesh Bhatt charged into the Home Minister’s office in Modi’s home state of Gujarat, claiming he had been kidnapped by a group of policemen and told to pay 200 bitcoin, worth some $1.8 million at the time, for his release. He said he had nowhere else to go.
The state’s elite Criminal Investigation Department was called in and the evidence it has uncovered points to a potential fraud on an epic scale. Eight policemen have been indicted and suspended pending trial. The abduction was allegedly spearheaded by Bhatt’s associate, Kirit Paladiya, and masterminded by Paladiya’s uncle Nalin Kotadiya, a former lawmaker in Modi’s ruling Bharatiya Janata Party, according to Ashish Bhatia, the lead CID investigator. Bhatt has been charged too, as the allegations of kidnapping widened.
Paladiya is now in jail, facing charges of abduction and extortion, and Bhatt and Kotadiya are both absconding, according to police. Kotadiya posted a video via Whatsapp in April denying wrongdoing and saying he’d informed authorities about the crypto scam, said Prashant Dayal, a senior Gujarati journalist who broke the story.
In the video, reposted on Youtube, Kotadiya says Bhatt is responsible for the scam and threatens to release evidence that could implicate other politicians. Both Bhatt and Paladiya have denied wrongdoing, according to their lawyers.
Between late 2016 and early 2017, Bhatt invested in BitConnect, a cryptocurrency firm that was being promoted in Gujarat by a man called Satish Kumbhani, according to Bhatia, the CID investigator, in an interview at his office late June.
Kumbhani is one of the founders of BitConnect, which has allegedly scammed individuals across the globe, according to Crypto Watchdogs, a group of six investors who’ve filed a U.S. federal lawsuit against the company. The firm recruited clients worldwide to deposit bitcoin and receive BitConnect coins they could lend at interest rates of more than 40 percent a month. The interest they earned was higher if they recruited others to invest. Attempts to contact the company and Kumbhani for comment were unsuccessful.
As the price of bitcoin soared last year from less than $1,000 to more than $19,700, so did BitConnect’s value. Bhatt and other investors in Gujarat poured bitcoin worth $3.2 billion into Bitconnect, according to Bhatia.
The vast inflows from Indian investors were partly the result of Modi’s shock move in November 2016 to invalidate banknotes worth 15 trillion rupees in an effort to curb tax evasion, according to a chartered accountant in Gujarat. Modi, who faces federal elections in early 2019, ruled the state as chief minister for more than a decade before becoming prime minister in 2014 with the promise of stamping out corruption.
As a result of Modi’s 2016 demonetization, about 45 billion rupees ($650 million) flowed to Gujarat’s port city of Surat, to be hidden away in assets including cryptocurrencies, said the accountant, who asked not to be identified because his clients include some of the city’s biggest diamond and textile traders.
Surat, the heart of the scandal, is famed for its entrepreneurial merchants who travel the world to set up a “dhandha,” or family business. Their tight-knit communities dominate Antwerp’s diamond trade and own a quarter of U.S. motels.
In the days following Modi’s demonetization -- when Indians were given about 60 days to bank their higher-value banknotes or lose them -- Google marked a surge in queries from the country on how to launder untaxed cash, or black money. Most of the searches came from Gujarat, Google Trends show.
One answer was to switch to cryptocurrencies. Crypto chatrooms around the world soon were abuzz about a surge in demand from Indians who were paying a 25 percent premium for bitcoin.
“After demonetization, we were watching India,” said Kiran Vaidya, a product manager at Toronto-based U.Cash and a blockchain adviser to Canadian banks. “We’d seen how bitcoin rose after the Greece economic crisis and similarly after things went south in Venezuela. The volumes were so high that it was obviously people who had the capacity to move markets."
While the initial rush may have been black money, there were cases of people selling houses and cars in hopes of doubling their investment, said the CID’s Bhatia.
Then, on Jan. 4, 2018, the state of Texas filed a cease-and-desist order against BitConnect. North Carolina followed five days later. The news came as the price of bitcoin crashed.
Amid the ensuing market turmoil, the Reserve Bank of India announced measures that virtually banned crypto transactions. Cryptocurrency exchanges responded with a lawsuit that is due to resume hearings in the Supreme Court in September.
Investigators across Gujarat and in the Indian capital of New Delhi say complaints about crypto frauds began pouring in after the U.S. cease-and-desist letters.
Still, those who had been trying to hide untaxed cash were in a quandary. If they went to the authorities, they would have to declare their investments.
So Bhatt and nine accomplices -- including Paladiya -- kidnapped two BitConnect representatives in Surat and demanded 2,256 bitcoin as ransom, CID investigators alleged. Paladiya, however, wanted more. He contacted his influential uncle, Kotadiya, and tapped the latter’s network in the local police to double-cross Bhatt and allegedly extort his bitcoin, according to allegations in police documents and interviews with investigators.
They were confident of success, gambling that Bhatt wouldn’t go to the authorities and certain that the anonymity of bitcoin would make the heist untraceable, according to the investigators.
They were wrong. Bhatt pressed charges.
Bhatt himself has gone “underground” -- Indian parlance for hiding to avoid arrest -- because his appeal for bail was rejected, said his lawyer Rupesh Rupareliya. In a July 26 telephone interview, Rupareliya said Bhatt denies any wrongdoing and says that Paladiya handled all the bitcoin transfers as Bhatt wasn’t tech savvy.
Paladiya’s lawyer Yogesh Ravani denied any wrongdoing by his client and said Paladiya was a victim of the kidnappers.
On July 5, the opposition Congress Party held a press conference demanding the ruling BJPinvestigate the matter in Gujarat.
Kotadiya is no longer with the BJP and since the Gujarat government initiated the investigation, it shows the government is dealing with the matter, said GVL Narasimha Rao, a New Delhi-based BJP spokesman. He asked Bloomberg News to speak to the state administration about Kotadiya’s threat to reveal more political involvement. Jitendrabhai Vaghani, BJP president for Gujarat, answered a call but disconnected when told the question was about the cryptocurrency fraud. He didn’t answer subsequent calls.
The BJP had its worst showing in more than two decades when state elections were held in Gujarat last December. Shailesh Kumar, Asia director with political risk advisory Eurasia Group, said the alleged scam follows a string of high-profile frauds.
“If more names of politicians do come out, there could be a price to pay,” he said. “The government will have to find the absconders and bring them back.”
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Alleged head of BitConnect cryptocurrency scam arrested in Dubai

BitConnect has been accused of operating an exit scam after duping investors out of millions of rupees.
If it sounds too good to be true, it probably is -- and certainly appears to have been the case when it comes to BitConnect, a folded cryptocurrency project that has been accused of scamming millions out of investors.
BitConnect, touted as a "self-regulating financial system" which is part of the "cryptocurrency revolution," used many buzzwords and the hype of celebrities to lure investors to participate, and also offered an incredibly high interest rate of at least one percent per day, leading many to believe it was a scam.
Investors would "lend" funds in Bitcoin (BTC) to various projects and these funds were converted to the platform's coin, BCC.
Divyesh Darji, the Indian head of BitConnect and believed to be a core promoter of the scheme, has reportedly been arrested by the Gujarat Criminal Investigation Department (CID) after arriving in Dubai on his way from Ahmedabad.
CNET: Bitcoin scams using celebrity images are on the rise, watchdog says
According to local publication the Financial Express, law enforcement believes that the promoters of BitConnect gained Rs 1.14 crore, roughly $14.5 million, from "thousands of investors" before the exchange closed its doors.
See also: What we can expect from future cryptocurrency regulation worldwide
BitConnect launched after India's Prime Minister Narendra Modi demonetized 500 and 1000 rupee notes in the region.
In 2016, 90 percent of the country's financial transactions were made in cash and the change was apparently made in order (.PDF) to crack down on corruption, counterfeiters and so-called "black money," otherwise known as undeclared income.
The unexpected changes caused economic chaos. From farmers struggling to keep their businesses afloat to banks attempting to cope with floods of customers, India's upheaval was severe -- and while the country has pulled through, at the time, the option of a digital currency outside of the government's grasp may have been extremely enticing.
TechRepublic: The top 5 security threats posed by ICO projects
However, the dream of controlling currency outside of the government's demonetization efforts and earning interest by the day did not last.
In January, BitConnect closed its exchange platform, with all loans offered on the platform released -- but all were converted to BCC rather than reverted to investors' original Bitcoin.
The price of BCC at the time was $363.62. However, now the system has closed and the founders are silent, the coin is worth $0.67, rendering the virtual asset effectively useless and leaving investors severely out of pocket.
"The company was registered in the UK and had an office in Surat," said DGP Ashish Bhatia of CID crime. "They launched their own 'Bitconnect coins' soon after demonetization. They promoted the company on social media and by holding gala functions in cities across the world. They lured investors with 60 percent monthly interest and incentives in the form of 'referral interest."
The only exchange which still permits the trade of BCC is Trade Satoshi, which intends to delist the coin in September.
BitConnect cited bad press, distributed denial-of-service (DDoS) attacks and US regulator scrutiny as reasons for the closure.
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Bitconnect fraud: How investors lost USD 3.14 billions

AHMEDABAD: It was too good a deal — earn 1% daily interest and double your money in 100 days. Too good to be true, hordes of rich investors in
realised a year later when the BitConnect platform folded up after pocketing roughly Rs 22,000 crore of their money in Bitcoin. For many, it was a double whammy after the jolt of demonetisation. In fact, the
craze had started in the state as people looked for safe ways to launder their piles of black money after November 2016.
“The transactions were anonymous, it did not require any proof and, best of all, it could be operated from anywhere in the world. A cryptocurrency boom started overnight,” Sunny Vaghela, CTO of an Ahmedabad-based IT firm, told TOI. Surat became the trade’s hub with numerous ‘equity brokers’, who juggled different cryptocurrencies for maximum profit. Bloomberg also reported that most Google searches for laundering money in that period were made from Gujarat, and Indians were willing to pay up to 25% more for Bitcoin.
Throughout 2017, Bitcoin gained value like nothing else. The price of one Bitcoin shot up from $900 to $20,000. It became a must-have asset. If you were greedy, you had to be invested in it. While demand alone was driving up Bitcoin’s price, along came an offer that made holding it even more lucrative. BitConnect, a similar sounding but unrelated cryptocurrency platform, offered to pay 1% daily interest to Bitcoin owners, and more if they got other owners on board.
Investors loaned their Bitcoin to BitConnect, which issued them its own token currency called BCC, and made all principal and interest payments in BCC as well. It was a classic Ponzi scheme, and the fact that they were signing away their precious Bitcoin should have alarmed investors. Many experts had been calling Bit-Connect a scam from the beginning, but with the returns so high, investors kept their eyes tightly shut.
BitConnect’s scheme was simple. It had a fixed number of BCC ‘coins’. Their value increased with demand. Its sky-high interest rate kept pushing up demand, so the price went on rising until the securities boards of
and North Carolina ordered it to stop dealing in January. “The investors got happy with notional gains. The coins, bought at $50-100, became worth $362 in a year,” said an investigator working on the case.
But when the bubble burst on January 16 this year, BCC crashed to $2 overnight, and now it trades below half a dollar. BitConnect promptly repaid investors in practically worthless BCC, and walked away with their Bitcoin. Altogether, BitConnect may have siphoned off more money than
Nirav Modi
, but police have not received many complaints, possibly because many of the investors used black money to buy Bitcoin. “So far, we have received complaints for cheating worth Rs 1.14 crore,” said Ashish Bhatia, DGP, CID (crime).
But some influential investors have tried squeezing out their money in unlawful ways. In March, Surat realtor Shailesh Bhatt complained that he was abducted by some policemen and made to transfer 176 Bitcoins from his digital wallet. About a dozen cops were arrested in connection with the conspiracy till July, and the name of former BJP MLA Nalin Kotadiya also cropped up in the investigation.
Later, it was alleged that Bhatt himself had abducted a BitConnect promoter, Dhaval Mavani, and his employee Piyush Savaliya, to extort 2,256 Bitcoins. One of Bhatt’s alleged partners in crime, Kirit Paladiya, then doublecrossed him to get more than his fair share of the cryptocurrency ransom.
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Tax notices to cryptocurrency investors in india 2018 because trading hits 21,000Crore

Back in India, the Bitcoin picture is still unclear. While SEBI has made a remark over the Bitcoin regulation, the IT department is set to issue notices to over 500K Bitcoin traders across the country. * Trading on crypto exchanges cross 21,000Crore in India- official * Tax dept seeks payment of tax on capital gains * Govt may introduce a bill to regulate crypto currencies — Source * Govt likens cryptocurrencies to ‘Ponzi schemes’, warns investors By Rupam Jain and Manoj Kumar NEW DELHI, Jan 19 (Reuters) — India has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said. Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru, Pune and Surat. Collecting over 2 Mn Bitcoin traders’ details from exchanges, the IT department in India is set to issue notices to around 400K-500K HNIs(high net worth individuals) for trading Bitcoins in significant numbers without paying any tax over the gains. Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March. The Indian government has issued repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors. it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month. B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade. “We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” he told Reuters. The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters. “We found that investors were not reflecting it on their tax returns and in many cases, the investment was not accounted for,” Balakrishnan said. Bitcoin, the world’s biggest cryptocurrency, soared more than 1,700 percent last year, hitting a record high just shy of $20,000 as institutional and retail investors around the world snapped up the virtual currency. Its huge gains have attracted the attention of global regulators tasked with protecting investors from fraud. In recent weeks, Japan and China have made noises about a regulatory crackdown, while South Korean policymakers said they were considering shutting down domestic virtual currency exchanges. REGULATION An Indian finance ministry official said a federal committee was looking into the possibility of imposing restrictions on virtual currencies and that eventually parliament would have to legislate a regulatory regime. Officials at Zebpay, India’s leading bitcoin exchange, said the industry was adding near 200,000 users every month with an estimated trade volume of about 20 billion Indian rupees ($315 million). “Many of our customers are treating digital currency like gold,” said Zebpay co-founder Saurabh Agarwal. Aman Kalra, marketing head of Coinsecure, a bitcoin exchange in New Delhi, said more than 150 bitcoins were changing hands every week through its platform. The company has 100,000 registered users and is now launching a platform to sell ethereum and other digital currencies. “I don’t think anyone in the government or Govt. official in india should label our business as a ‘Ponzi scheme’, we are not doing anything illegal,” said Ronak (WhiteMoney Exchange). Surat, Jan17, Bitcoin wallet firm WhiteMoney today said it has crossed Rs 40crore turnover within 3 months of operations as more Indians are going for the digital currency. “In only 3 months, the company has crossed 50 crore turnover” WhiteMoney said in a statement. Bitcoins are digital money and their value is determined on the basis of their demand and supply. The digtal money is limited in numbers. Only 21 million Bitcoins can be generated globally and they can be traded even in fractions, up to eight decimals. Last bitcoin will be generated in 2140 but 99 per cent would be already there by 2040. Tax inspectors said they sought help from experts in blockchain, the technology that underpins bitcoin, to conduct the survey. In some cases, tax officials themselves participated in the trade to identify loopholes after they found investors had poured in billions of dollars through unregulated exchanges. The biggest worry for New Delhi, the finance ministry official said, was how to protect investors trading on offshore exchanges. Already hundreds of investors have gone to the police and courts with complaints of transactions in virtual currencies that turned out to be fraudulent, said Pavan Duggal, a Supreme Court lawyer specialising in cybercrimes. “Considering cryptocurrencies are here to stay, the government must consider granting limited legality while ensuring that these are not used for crypto crimes,” he said. ($1 = 63.7625 Indian rupees)
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Surat BitCoin Scam: Amreli PI Anant Patel & Other Officials Statement taken by CID Crime Download VTV Gujarati News App at VTV … Subscribe to Get more stuff like this Subscribe to our mailing list and get interesting stuff and updates to your email inbox. The industrial hub of Surat located in the western coast of India has already earned accolades as the leader of diamond processing on a global basis. But it has again emerged in the spotlight after Google Trends data revealed that Surat has topped the charts in terms of relative interest while searching about Bitcoin in 2017. Submit. Type above and press Enter to search. Press Esc to cancel. SURAT: Entire business-related data of a consumer product trading firm in Surat was wiped out by cyber criminals who had demanded US$500 from the firms owner. Based on complaint filed by Rakesh HodlHodl is a global P2P Bitcoin exchange, that allows users to trade directly with each other. The site doesn’t hold user’s funds which allows it to avoid KYC and ID verification processes. HoldHold locks user funds in multisig escrow which minimizes the possibility of Bitcoin assets theft and reduces trading time. Bisq

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