Head of BitConnect Asia Arrested in Delhi

Avi Rosten

In another twist in the saga of Asian cryptocurrency scams, the alleged head of operations for the failed cryptocurrency BitConnect has been arrested in Delhi.

Arriving in Delhi Aiport on Saturday, August 18th, local media report that Divyesh Darji, a vocal promoter of the BitConnect platform and coin, was detained by immigration officials.

Gaining enormous popularity in December 2016 with the launch of its initial coin offering, Bitconnect saw its market-cap reach an enormous $2.6bn, before being exposed as little more than a Ponzi scheme and the largest scam in the cryptocurrency industry.

With the value of the coin collapsing in January 2017, Darji was a notable proponent of Bitconnect in India and Asia more broadly, and was linked to several scandals including the alleged extortion of 2,000 bitcoin from investors in the ill-fated Bitconnect coin.

Police reported that 169 bitcoins and 8kg of gold were seized as part of the investigation, and in a statement to the Times of India, Ashish Bhatia of Gujurat CID explained:

The company was registered in the UK and had an office in Surat. 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% monthly interest, and incentives in the form of ‘referral interest.

With the BitConnect project gaining substantial traction in the Indian market, the collapse and exposure of the scheme led to significant disenchantment with cryptocurrencies in general in the country.

While Asian scams seemingly continue apace - with three Chinese citizens arrested today in the latest scam to plague the continent - many will hope that this latest arrest attests to authorities’ growing efforts to clamp down.


Featured Image Credit: "Scam" by "Nick Youngson" via Alpha Stock Images; licensed under "CC BY 3.0"

Bitcoin From the 2016 Bitfinex Hack Mysteriously on the Move Again

Little over 30 bitcoins stolen from the prominent cryptocurrency exchange Bitfinex back in 2016 have mysteriously started moving once again, even after the arrest of two individuals allegedly involved in the exchange’s security breach.

According to Whale Alert, a large transaction monitor, an initial transaction of 28.39 BTC was made from a wallet associated with the 2016 Bitfinex hack before a second transaction of 2.27 BTC was made. Both went to unknown wallets, with the total amount being transferred coming close to $300,000.

The hackers often move their funds around, presumably in an attempt to launder them so they can cash out. In June 2019, they moved over 172 BTC over a total of five transactions to unknown addresses. In August, around 30.6 BTC, then worth over $350,000, were moved as well.

In total, the hackers stole nearly 120,000 bitcoins from the popular cryptocurrency exchange in 2016. At the time, one bitcoin was trading for around $600, which means they stole roughly $72 million. As the price of the flagship cryptocurrency skyrocketed since then, the 120,000 BTC are now worth over $1 billion.

Taking this into account users on social media started predicting a price cash, as if the hackers were able to cash all of their funds out the price of BTC would certainly drop significantly. To cash out, however, they have to find a way to launder the funds – a challenge at a time in which every liquid cryptocurrency exchange enforces know-your-customer (KYC) checks.

Bitcoin from the 2016 Bitfinex hack moving may be surprising, as Israeli police last year arrested two brothers allegedly involved in the security breach. It’s worth pointing out, however, in the UNUS SED LEO token whitepaper the exchange appeared to give the hackers a chance to return their funds and keep a specific percentage “as a reward for collaborating in finally resolving” the issue.

Referring to past transactions Anneka Dew, Bitfinex’s marketing director, noted they weren’t related to the procedure outlined in the token’s whitepaper.

Featured image via Pixabay.