The Enforcement Directorate (ED) has seized its biggest-ever cryptocurrency worth Rs 1,646 crore as part of a “mega” money laundering investigation into a fraud investment scheme where numerous depositors were duped in the name of securities investment, official sources said.
The Ahmedabad office of the federal probe agency has also seized Rs 13.50 lakh in cash, an SUV and a number of digital devices after it concluded a fresh round of searches on Saturday in the case related to “fraudulent” and unregistered offering and sale of securities in the form of investments through ‘BitConnect lending program’.
The ED case, filed under the Prevention of Money Laundering Act (PMLA), stems from an FIR of the Surat Police crime branch which said the alleged fraud took place between November 2016 and January 2018 (after demonetisation).
The agency deployed a team of its tech-savvy experts who examined the “complex web” of transactions carried out in “numerous” crypto wallets to unmask the origin and controllers of these crypto wallets.
It was found that many transactions were carried out through the “dark web” to make the transactions untraceable, the sources said.
The agency tracked “numerous” web wallets and gathered ground intelligence to zero in on the wallets and the premises where the digital devices containing the said cryptocurrencies were available, they said.
Sources told PTI that cryptocurrencies worth Rs 1,646 crore were seized and transferred into a special crypto wallet of the agency making it the biggest-ever seizure of virtual digital assets in a mega-money laundering investigation which is still going on.
The agency found during the probe that the founder of an unincorporated organisation, established “a worldwide network of promoters, and rewarded them for their promotional efforts by paying them commissions.”
In order to “induce” investors to deposit funds in the form of cash and Bitcoins, into the purported lending program, BitConnect represented, among other things, that it would deploy a purported proprietary “volatility software trading bot” (Trading Bot) that, they claimed would use investor funds to generate returns as high as 40% per month, the ED found.
The promoters posted “fictitious” returns on the BitConnect web portal that amounted to an average of 1% per day or about 3,700% on an annualised basis, the sources said.
These claims were a “sham” as the accused knew that BitConnect did not deploy investor funds for trading with its purported Trading Bot rather, they “siphoned” investors’ funds off for their own benefit, and their associates’ benefit, by transferring those funds to digital wallet addresses controlled by them, the sources said.
The agency had attached assets worth Rs 489 crore in this case in the past.
The sources said foreign nationals also “invested” in BitConnect and the “main accused” is under probe by federal authorities in the US.