The Enforcement Directorate (ED) has seized cryptocurrencies worth Rs 1,646 crore as part of its investigation into a money laundering case in a fraudulent investment scheme. This is the biggest cryptocurrency seizure by the ED so far. Many depositors were defrauded in the name of investing in securities in the fraudulent investment scheme. The case is related to the fraudulent and unregistered offer and sale of securities in the name of investment through the 'Bitconnect Lending Program'. According to news agency PTI, the ED's Ahmedabad office has also seized cash worth Rs 13.50 lakh, an SUV and several digital devices after completing the search operation on Saturday, February 15.
This ED case, registered under the Prevention of Money Laundering Act (PMLA), started from the FIR of Surat Police Crime Branch. The Crime Branch says that the alleged fraud took place between November, 2016 and January, 2018 (after demonetisation).
How did ED tighten its grip
The ED deployed a team of its tech-savvy experts who investigated the complex web of transactions made in several crypto wallets to trace the origin and controllers of these crypto wallets. According to PTI, sources say that it was then found that many transactions were made through the dark web, making them untraceable. The agency monitored several web wallets and gathered ground intelligence to track the wallets and premises where digital devices containing these cryptocurrencies were available.
Seized cryptocurrencies transferred to special crypto wallets
According to the report, cryptocurrency worth Rs 1,646 crore has been seized and transferred to a special crypto wallet of the ED. This has made it the biggest seizure of virtual digital assets so far in the investigation of a major money laundering case and is still ongoing. The agency had earlier seized assets worth Rs 489 crore in this case. It is being said that foreign nationals have also invested in Bitconnect and the main accused is under investigation by federal authorities in the US.
The investigation revealed that BitConnect was an unincorporated organization. Its founders set up a worldwide network of promoters and paid them commissions for their promotional activities. To induce investors to deposit money in the form of cash and bitcoins, BitConnect claimed, among other things, that it would deploy a trading bot that would generate returns of up to 40 percent per month using investors' funds. The promoters posted fictitious returns on the BitConnect webportal that averaged 1 percent per day, or approximately 3,700 percent annually.
