$3 Billion in BTC in Question as India's Biggest Financial Scam Ever is Revealed

Investigations into a $3 billion Ponzi scheme in the Indian state of Gujarat have revealed a laundry list of characters and plot points that seem straight out of Hollywood. In addition to allegations of tax evasions and police corruption, Bloomberg report that the scheme also involves “a kidnapper who was kidnapped and a fugitive politician.”

And, of course, controversial crypto platform BitConnect.

If alleged details about the massive scheme are proven to be true, the gambit could be larger than any banking scandal that India has ever seen.

A Long, Winding Tale

Finance Magnates originally reported on part of the scandal in April, when a property developer by the name of Shailesh Bhatt claimed that he had been kidnapped by police and taken to a secret location. He was then forced to transfer 200 BTC (worth $1.8 million at the time) to the kidnappers’ wallet.

Following the crime, the Gujarat Criminal Investigation Department (CID) began an investigation, and eight policemen were indicted soon after the investigation began; they are currently awaiting trial.

However, the CID quickly discovered evidence that pointed toward a massive fraud.

In fact, evidence suggests that the “kidnapping” was organized by Kirit Paladiya, an associate of Bhatt. Former lawmaker Nalin Kotadiya (who also happens to be Paladiya’s uncle) has been identified as the “mastermind” of the kidnapping plot.

So far, all three men - Paladiya, Kotadiya, and Bhatt - have all been charged in connection with the crime. Paladiya is currently facing jail time on charges of abduction and absconding; Bhatt and Kotadiya are currently avoiding arrest.

It’s unclear exactly who is behind which aspects of the scheme. Kotadiya posted a WhatsApp video accusing Bhatt of being responsible for the scam along with threats to publish evidence that could implicate other politicians in the scheme.

A “Kidnapped Kidnapper”?

Bhatt’s involvement in the crime originally began in late 2016, when he became an investor in BitConnect. BitConnect is a crypto Trading Platform that has been widely accused of being a scam. The platform was being promoted in Gujarat by one Satish Kumbhani, who also happens to be one of the founders of BitConnect.

Along with the rest of the crypto markets, BitConnect’s token value skyrocketed at the end of 2017. Investors across India, including Bhatt, sank an estimated $3.2 billion into the platform.

The massive influx of Indian cash to BitConnect reportedly happened in response to Prime Minister Narendra Modi’s decision to invalidate 15 billion rupees’ worth of banknotes in November. The move came as part of an effort to reduce tax evasion.

As Indians were forced to either deposit their higher-value banknotes or lose their value, many citizens turned to Cryptocurrencies as a way to hold onto their cash. Thus, a slew of scammers - allegedly including BitConnect - saw a golden opportunity.

Eventually, though, Bhatt caught onto Khumbani’s antics and kidnapped him with nine accomplices. Bhatt demanded ransom, and when he was not paid, went to the authorities to attempt to press charges.