Complaint Filed Against BitConnect Founder in India Following Indictment in the US

Updated by Kyle Baird
In Brief
  • The founder of BitConnect is now under investigation in India for running a multi-million dollar scam.
  • The complainant alleges that he lost close to 220 bitcoins.
  • Kumbhani and six others have been named by the lawyer who filed the FIR on Aug. 16.
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Satish Kumbhani, the founder of cryptocurrency investment platform BitConnect, is now being investigated in India for the multi-million dollar scam.

Reports noted that a Pune city-based lawyer, Kondhwa Budruk, filed a complaint in the case on Aug. 16 with the cyber crime police.

BitConnect another scheme to mislead investors

The first information report (FIR) alleged that the lawyer lost nearly 220 bitcoins (close to a market value of $5.14 million) with several investment platforms. The lawyer has named Kumbhani (36) and six others. No arrests have reportedly been made so far, as per the report.

Earlier in February, a federal jury in San Diego indicted the BitConnect founder on charges of operating a Ponzi scheme. Under this, the founder was found to have paid early investors with funds from later investors, stealing nearly $2.4 billion from them.

In this case, according to the FIR, the complainant was duped out of his initial investment of 54 bitcoins as well as the returns of 166 bitcoins, which he was allegedly forced to reinvest in the platforms between 2016 and June 2021. As per senior police inspector DS Hake, Kumbhani and his associates were running a virtual currency scam that allegedly misled investors.

India’s FM raises fresh concerns as agencies probe platforms

The news comes days after India’s Finance Minister Nirmala Sitharaman raised fresh concerns about investing in virtual assets. “The government has already warned. I think all of us will have to share our thoughts and move with a bit of caution on this,” Sitharaman warned the public and startup entrepreneurs.

Her comments also come on the back of an ongoing investigation where the Indian Enforcement Directorate (ED) blocked bank assets worth around $46 million that belonged to the troubled crypto exchange Vauld after freezing the bank account of one of the directors of Zanmai Lab Private Ltd, the operator of the Indian cryptocurrency exchange WazirX

This is significant considering India’s crypto ownership is the seventh highest in the world, with approximately 7.3% of the Indian population owning crypto as of 2021, according to a recent UNCTAD report.

That said, Minal Thukral, executive vice president of growth and strategy at CoinDCX, expressed optimism about the future of crypto in India in a recent interview.  

“As per the UN report, crypto shows a dramatic development in recent years which is a positive sign given that 65 crore Indians (~50%) have access to the internet now. Furthermore, crypto innovations will continue to grow in India irrespective of the continuous fear around increasing rates, inflation, etc,” Thukral explained.

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