ED to take global cryptocurrency ponzi scandal to multilateral forums after seizing Rs 1,646 crore in assets

After seizing assets worth ₹1,646 crore as part of its probe into a global $2.4-billion “ponzi” cryptocurrency scandal, the Enforcement Directorate (ED) will take up the matter at multilateral forums so that monies can be restored to victims of fraud spread across the globe, said people in the know.The agency will identify victims of fraud, their nationality and ensure restoration of assets in collaboration with other countries. “Since the victims are spread across the globe, including Thailand, Vietnam, the US, Australia, Korea and other countries, the subject matter of this investigation will be taken up at multilateral forums. The endeavour is to ensure that the proceeds of crime are expeditiously restored to the victims,” a senior officer told ET.

According to people in the know, ED is in touch with the US authorities about the investigation. The agency will share more information about the probe and its findings with its US counterparts in due course of time.

In a related development, the agency summoned and grilled Satish Kumbhani, alleged mastermind and indicted by the US for “orchestrating” the global multi-billion-dollar scandal. According to people quoted above, Kumbhani was quizzed by the agency on the modus operandi adopted by him and his associates.

The agency is likely to move court to secure arrest warrants of Kumbhani following which he will be taken into custody, people quoted above added. “He has been quizzed in detail about the modus operandi adopted by him and his associates. He was also grilled on the concealment of proceeds of crime,” an officer added.

As first reported by ET last week, Kumbhani and his co-accused concealed “the location, source, origin, ownership, and control of the investment proceeds fraudulently obtained from BitConnect‘s investors”. The accused concealed the proceeds of crime, which run into thousands of crores of rupees, “by commingling, cycling and exchanging such funds through BitConnect’s cluster of cryptocurrency wallets, unknown wallets and various internationally-based cryptocurrency exchanges”.On February 25, 2022, Kumbhani was indicted by the US for his “central role” in the multi-billion-dollar fraud. He was later declared a fugitive by the US authorities. The ED last week traced Kumbhani to Ahmedabad.Kumbhani founded BitConnect, an unincorporated organisation, establishing a worldwide network of promoters and rewarding them for their promotional efforts by paying them commissions.

According to US prosecutors, he touted BitConnect’s “lending programme” based on proprietary “trading bot” and “volatility software” that would trade on the global crypto markets. “But in reality, the lending programme was a massive ponzi scheme that raised $2.4 billion from investors around the world before shutting down in January 2018,” they said at the time.

BitConnect used money from new investors to pay earlier ones, the US said.