BitConnect, a company which promised to make people rich overnight, turned out to scratch out more money than demonetization out of people’s hands. However, not many complaints have been received by police due to the use of black money to buy bitcoin.
The offer proposed by BitConnect lured hundreds of investors. It promised traders to provide 1% daily interest and double their money in 100 days. Gujarat’s investors shared a large percentage of investors. A year later, the truth was realized by the investors when BitConnect flew overnight with roughly Rs 22,000 crore’s value of Bitcoin.
The scam came as a double shock after demonetization for many. People looked for ways to launder their abundant black money and bitcoin served the purpose well. “After November 2016, the transactions were anonymous and didn’t asked for any proof and could be accessed irrespective of the geographic location. The cryptocurrency boom started overnight.,” said Sunny Vaghela, CTO of an Ahmedabad-based IT firm, told TOI. Surat saw a sudden rise of equity brokers who manipulated different cryptocurrencies to earn maximum profits.
As reported by Bloomberg, the most google searches for laundering money were made from Gujarat in that period. The craze was such, that people were ready to pay up to 25% more for Bitcoin. In 2017, bitcoin value started touching the sky. The price of one Bitcoin raised up from $900 to $20,000. It enticed numerous greedy investors and they invested willingly.
While the price of Bitcoin was already rising, the offer by BitConnect manipulated people even more to hold the currency. BitConnect offered to pay 1% interest to the Bitcoin holders and even more if they invite investors to the platform. Investors exchanged their Bitcoin with BitConnect, which in return issued its own token currency, BCC. All the transactions were done in BCC. Though experts had been alerting people about BitConnect being a scam, yet with such high returns, investors didn’t pay any attention.
The scheme of BitConnect was pretty simple. It contained a fixed number of BCC ‘coins’. whose value increased with demand. The high-interest rate kept increasing its demand. Subsequently, the price raised continuously until the securities boards of Texas and North Carolina ordered BitConnect to stop dealing in January.
The temporary gains made investors contented. According to an investigator working on the case, the coins purchased at $50-100, became worth $362 in a year. But the people only realized the truth on January 16th this year when BCC crashed overnight and trades came down to half a dollar. BitConnect abruptly repaid the investors in worthless BCC token and vanished along with people’s Bitcoin.
Many cases of such frauds have come to notice in recent times. A Surat realtor Shailesh Bhatt complained in March that he was forced by some policemen to transact 176 Bitcoins via his digital wallet. Some cops were arrested regarding the case till July. Later it came to the knowledge of the authorities that Shailesh himself had abducted a BitConnect promoter to extort 2,256 Bitcoins. Further, his partner Kirit Paladiya double-crossed him to attain more her share of the ransom.
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