The investigation of our country’s infamous Bitconnect scam are turning out to be nothing short of a bollywood white collar crime flick. Some very interesting findings have just come out from the ongoing investigations, which reveal that the men behind this scam were also shown their right place by an investor who suffered losses because of their big claims. Plus, the Crime Investigation Department (CID) has found an interesting thing to do with the Bitcoins recovered till now in this scam. Read on to figure out everything.
Bitconnect promoters faced the wrath of a distraught investor
It’s turning out that an investor who suffered losses because of the false promises made by Bitconnect promoters took law in his own hands to teach Bitconnect management a lesson. Shailesh Bhatt, who had invested in Bitconnect expecting a 1.1% daily return, became furious when instead of any returns his money went down the drain. So furious that he ganged up with eight other people and extorted 2,000 Bitcoins from the promoters of Bitconnect in December last year.
Unfortunately, he could not enjoy his newly found wealth for too long as he was also picked by CID officials a month later from his residence. Besides him CID arrested and questioned his nephew Nikunj Bhatt as well because he too was a part of gang that extorted money from Bitconnect promoters. Nikunj possessed 12 Bitcoins out of 2,000 that were extorted.
Bitconnect used to target 1% daily return using a software
According to statement given by Nikunj Bitconnect possessed a system that could calculate the high and low points of Bitcoin’s price action for any given day. Once these two points were calculated, the system used to target 1% daily return as it traded Bitcoins. This return, when calculated for a whole year, results in 365% annual ROI. A 3x return in simple language, that was promised to be delivered in an year.
Moreover, Nikunj said that company also had “slabs” to lure investors into pumping more money. Those who invested amounts between $1,000 – $5,000 were provided an extra 0.1% return over the base 1%. Similarly, investors who invested more than $5,000 were provided an extra 0.2%. The highest slab promised an extra return of 0.25%.
Bitconnect operations spread overseas
The company’s network is not limited to India alone. It also operates in Indonesia, Hong Kong, Vietnam, Singapore and even United Sates according to CID officials.
Bitcoins recovered to be exchanged for INR
Now this is the most interesting part of story. Government doesn’t want us to trade Bitcoins, but CID has said that it will covert the recovered Bitcoins to Indian Rupees and then deposit the amount with RBI. So a government agency will trade crypto despite RBI saying since last year again and again that “no one should trade them”. What an irony!
Anyways, there’re 3 lessons in this whole story:
- One: cryptos are risky territory and you should play in this territory only when you understand (at least partially) what you’re doing. Relying entirely on 3rd parties is not good.
- Two: invest only as much as you can afford to lose completely.
- And three: don’t ever take law in your hands!
Keep these 3 things in mind and you’ll trade cryptocurrencies far better than these scammers out in the market.