ED seizes ₹1,646 crore under PMLA case in ‘biggest-ever’ cryptocurrency fraud | Stock Market News


The Enforcement Directorate (ED) has seized its biggest-ever cryptocurrency worth 1,646 crore as part of a “mega” money laundering investigation into a fraud investment scheme where several depositors were duped in the name of securities investment. According to news agency PTI, funds related to “fraudulent” and unregistered offering and sale of securities in the form of investments through a ‘BitConnect lending program’ were seized.

The Ahmedabad office of the federal probe agency seized 13.50 lakh in cash, an SUV and several digital devices after concluding a fresh round of searches on Saturday, February 15. 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 occurred between November 2016 and January 2018.

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ED unearths ‘biggest-ever’ crypto fraud

The agency deployed a team of tech 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 transactions were carried out through the “dark web” to make them untraceable.

The probe agency tracked “numerous” web wallets and gathered the ground intelligence to zero in on the wallets and the premises where the digital devices containing the said cryptocurrencies were available. As per PTI, crypto worth 1,646 crore was seized and transferred into the agency’s special crypto wallet, making it the biggest-ever seizure of virtual digital assets in a mega-money laundering investigation that is still ongoing.

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The agency also found during the probe that the founder of BitConnect, an unincorporated organisation, established “a worldwide network of promoters and rewarded them for promotional efforts by paying them commissions.” 

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 cent per month, the ED found.

The promoters posted “fictitious” returns on the BitConnect web portal that amounted to an average of one per cent per day or about 3,700 per cent on an annualised basis. The claims were a “sham” as the accused knew that BitConnect did not deploy investor funds for trading with its purported Trading Bot. 

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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. According to PTI, the agency had attached assets worth 489 crore in this case in the past. The sources said foreign nationals also “invested” in BitConnect, and the “main accused” is being probed by federal authorities in the US.


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