Back in January of this year, Bitconnect, a cryptocurrency exchange and token, closed down operations, according the company was due to negative press, scrutiny by US regulators and distributed denial-of-service (DDoS) attacks on its system, as well as allegations of being a Ponzi scheme due to its multilevel marketing model..
Recently Divyesh Darji, the alleged Indian head of Bitconnect as well as the alleged kingpin of the Gujarat cryptocurrency scam, was arrested after disembarking at New Delhi’s Indira Gandhi International Airport on August 19, 2018.
The company was registered in the United Kingdom, and commenced operations in Dubai from the Burj Khalifa tower. An office was also run out of Surat, in the Indian state of Gujarat.
The arrest of Darji by the Gujarat Police’s Criminal Investigation Department (CID), came after a third investigation to crackdown on the company.
This is the second case that India’s law enforcement had to deal with concerning Bitconnect. The first was the kidnapping of Bitconnect promoters Dhaval Mavani and Piyush Savaliya by Shailesh Bhatt, a Surat-based real estate builder. After the builder lost his invest in Bitconnect’s ICO, he extorted hundreds of thousands of dollars to recoup his investment.
In the beginning the fledgling company had invested in heavy marketing to pull in investors and also offered an extremely high-interest rate of 1% (or higher) per day.
Bitconnect converted the investment it had raised into Bitcoin and then changed them into their own Bitconnect Coin (BCC).
In a statement for a senior police officer of Gujarat’s state CID:
“They launched their own ‘BitConnect coins’ soon after demonetization. They promoted the company on social media and by holding gala functions in cities across the world. They lured investors with 60 percent monthly interest and incentives in the form of ‘referral interest.’”
Currently, Bitconnect Coin is all but defunct.