Gujarat: ED arrests two in BitConnect crypto fraud case

Ahmedabad, Jan 22 (SocialNews.XYZ) The Directorate of Enforcement (ED) has arrested Nikunj Pravinbhai Bhatt (33) and Sanjay Kotadia (49) in connection with a large-scale cryptocurrency fraud linked to the BitConnectCoin scam, officials said on Thursday.

The arrests were made on January 19 under Section 19(1) of the Prevention of Money Laundering Act (PMLA), 2002, following an extensive probe into fraudulent cryptocurrency investments and related money laundering activities.

The two accused were produced before the Special PMLA Court in Ahmedabad on January 20, which granted the ED four days of custodial remand.

According to the ED, the investigation was initiated on the basis of two FIRs registered by the CID Crime Police Station, Surat, against Shailesh Babulal Bhatt, Satish Kumbhani, and others.

The agency alleged that proceeds of crime were generated by inducing the public to invest in BitConnectCoin through a purported “Lending Programme”, which was controlled and operated by Kumbhani and his associates.

The ED’s investigation revealed that between November 2016 and January 2018, the accused carried out fraudulent and unregistered offerings of cryptocurrencies in the guise of investments in BitConnect’s lending scheme.

Investors from India and abroad were promised extraordinarily high returns—up to 40 per cent per month—through a claimed proprietary “volatility software trading bot”.

To create a false impression of legitimacy and growth, fictitious returns of about 1 per cent per day, or nearly 3,700 per cent annually, were displayed on the BitConnect website.

However, the agency said these claims were a sham, as investor funds were never deployed for trading. Instead, the money was siphoned off for the personal benefit of the accused and their associates by transferring funds to digital wallets under their control.

During searches conducted under the PMLA on January 9, 2026, the ED carried out operations at five locations, resulting in the seizure of digital devices and incriminating documents.

Assets in the form of investments in shares and mutual funds, cryptocurrencies, and cash amounting to approximately Rs 19 crore were frozen. The probe further revealed that Nikunj Bhatt was one of the accomplices of Shailesh Bhatt in a separate crime involving the kidnapping and extortion of cryptocurrencies and cash.

Of the extorted amount, Bhatt received at least 266 Bitcoins in two different exchange-linked accounts, of which 10.9 Bitcoins have been attached by the ED so far.

Investigators found that at least 246 Bitcoins were routed through multiple third-party crypto accounts to conceal their origin, before being converted into Ethereum and USDT and transferred to various wallets, including those associated with Sanjay Kotadia.

As per the investigation, Nikunj Bhatt transferred USDT worth approximately Rs 20.70 crore to wallets linked to Kotadia for purported cryptocurrency trading.

Additionally, Kotadia allegedly received USDT worth about Rs 4.05 crore from Shailesh Bhatt for trading purposes. The ED also alleged that both Bhatt and Kotadia failed to cooperate with the investigation, made evasive and incomplete disclosures regarding the receipt and utilisation of cryptocurrencies, and attempted to obstruct the probe by providing false and misleading statements under Section 50(3) of the PMLA.

Citing the risk of evidence destruction and flight, the agency proceeded with their arrest. So far, the ED has attached and frozen assets valued at approximately Rs 270 crore in the case, including properties and cryptocurrencies linked to Shailesh Bhatt and others.

Further investigation into the money laundering network and the role of additional accused is ongoing, officials said.

Source: IANS