BitConnect

2018: Arrest of the founder of BitConnect

On August 18, 2018, one of the founders of the cryptocurrency pyramid BitConnect was arrested, due to which investors lost more than $3 billion. Divyesh Darji was detained at Delhi Airport, where he arrived on a flight from Dubai.

The arrest occurred seven months after the cessation of trade in BitConnect tokens on cryptocurrency exchanges. BitConnect was a well-known platform for loans and cryptocurrency exchange, which eventually turned out to be a large-scale financial pyramid. Investors invested BitConnect millions of dollars in the token under the promises of 1-2% of profit per day.

Numerous lawsuits have been filed against BitConnect owners in which investors claim to have lost $3.2 billion of funds invested in the project.

The creators of the cryptocurrency pyramid BitConnect earned more than $3 billion

BitConnect for a long time openly considered as a fraudulent scheme, including quite influential people and members of the crypto community. Experts pointed out that the project documentation spoke of too high profits, even impossible, and this is one of the classic signs of a fraudulent scheme used to lure naive investors. However, this did not encourage investors who really considered this organization quite legal.

The company used various methods to attract investors. For example, if a person invested from $1000 to $5,000, an additional 0.1% was added to his income. If the investor invested even more, then his percentage increased - up to 0.25% of the additional profit per day.

Law enforcement agencies became interested in the BitConnect case after in December 2017 the company was unable to pay money to one of the investors named Shailesh Bhatt. Then the latter teamed up with eight other persons  and took away  2,000 bitcoins from Dhaval Mawani (led the Indian wing BitConnect along with Divesh Darji).

According to the Indian Criminal Investigation Department (CID), the company operated not only in India, but also in Indonesia, Vietnam, Hong Kong, Singapore and the United States. Several accounts related to these transactions have been identified and reported to the respective banks.

The BitConnect platform was launched shortly after Indian Prime Minister Narendra Modi announced the removal of Rs 500 and Rs 1,000 bills from circulation. These measures became part of the Indian government's fight against financial fraud, but there was a side effect: people began to grow interest in international assets, including cryptocurrencies. The creators of the BitConnect took advantage of this demand.

On Divyesh Darji's page on the social network LinkedIn he calls himself a teacher with 25 years of experience, who has a degree in economics, a bachelor of laws, and also manages two businesses: a cryptocurrency training institute in Surat, as well as Navivan, which develops solutions for businesses in the field of fitness.

In connection with the activation of criminals around the world who decided to use cryptocurrencies for their scams, in July 2018, five countries began a joint fight against financial crimes involving cryptocurrencies. The United States and British tax authorities have agreed to lead an international alliance that will combat transnational financial crimes, including the use of Bitcoin and other digital assets.^[1]

2017: Buterin brought down the capitalization of BitConnect

In November 2017, co-founder of EthereumVitalik Buterin  called the  project the BitConnect Ponzi scheme, after which the market capitalization of   the platform fell by almost $1.4 billion, but gradually recovered and continued to grow.

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