Despite attempts by multinational agencies to fight and completely eradicate Ponzi schemes which are associated with cryptocurrencies, scammers have always been able to come up with new ways of beating the system. While the United States has achieved a significant milestone in the fight against crypto Ponzi schemes, developing countries, India especially have found themselves more often than not volatile to these vices and hence easily manipulable.
The latest development concerning the same has seen detectives from the Criminal Investigation Department (CID) in India arrest Shailesh Bhatt-a Bitconnect investor for illegally extorting an estimate of over 2000 Bitcoins from promoters of Bitconnect coin-turned Ponzi.
Shortcut to success
Officials indicated the project was formally initiated to the market as a legit cryptocurrency exchange back in 2016. It since ferociously promoted Bitcoin terming it a feasible investment option for any smart investor in the market. The firm based its operations in the Diamond City before later spreading to other regions in the country. It eventually launched its pyramid scheme in 2017 after successfully managing to capture promoters as well as locals’ confidence and trust over the previous year.
In a bid to lure more clients to the Ponzi, the firm promised ‘double-digit’ returns to investors on their investments. It also established investment slabs in which investors who bought cryptocurrencies whose worth surmounted up to $10,000 would obtain ‘volatility benefits’ while those whose crypto investment surmounted to between $1,000 to $5000 would obtain 0.1% additional returns on their investments. As if not enough, the firm further offered 0.25% and 0.2% additional benefits to investors who could manage an investment of $10,000 to $100,000 and $5,000 to $10,000 in that order.
The firm has spread its network beyond Indian borders and the risk of affected countries suffering the same fate as India cannot be overruled. “Apart from India, the firm has its presence in Vietnam, Indonesia, Hong Kong, Singapore and the US. We have identified a few accounts associated with the transactions and have intimated the respective banks about it,” stated one official.
How the rain started beating them
Everything ran smoothly until the close of 2017 when some of the investors realized the looming risks ahead and hurriedly withdraw most if not all of their investments. Others such as Shailesh Bhatt were not so lucky, and that’s when they thought it necessary to extort the cryptocurrency. “Shailesh Bhatt was one of such investors who dreamed good returns after investing in 0.1% scheme. However when the company showed an inability to pay his money back, he along with eight others extorted the cryptocurrency from Mavani in a firm house,” one investigator narrated.
