Divyesh Darji was arrested this week at a Delhi airport after flying in from Dubai. He and other leaders of the infamous scam crypto project Bitconnect have been sought by police the world over after their scheme collapsed in January of this year.
Bitconnect Leader Busted
The Bitconnect scam lasted approximately 11 months, with promises of absurdly high guaranteed returns, to the frustration of many investors and developers in the space. The 2017 bull run provided the perfect storm for allowing the project to grow.
Crypto was booming, and the 40% monthly returns on investment promised by Bitconnect was something that other projects – legitimate projects, were sometimes able to deliver. The difference was that Bitconnect did not have a product.
They were able to pay unsustainably high dividends because of a combination of new money entering the market (and old users reinvesting) and the rising tide that increased the value of the coins people paid to get in on Bitconnect, to begin with.
In January 2018, after Cease and Desist letters issued in Texas and North Carolina made it difficult to continue recruitment of new victims without opening themselves up to legal action, the Bitconnect team canceled all contracts and scattered like cockroaches.
The price of the token quickly fell to zero. The only value that had gone into the project – the coins used to buy the Bitconnect token, disappeared with the leaders.
The Dubai Job
The leadership of the Bitconnect group knew the timing of when the scam would collapse and were able to take their money and run. Darji was one of these. He now owns a company officially based in the U.K. but operating out of the world’s tallest building, Burj Khalifa, in Dubai.
It is believed he was returning to India on business for his new company when he was arrested for his role in the Bitconnect affair, where he promoted the scam to the people of India, many of whom were looking for safe places to invest their money in the wake of their government demonetizing some bills of its own currency, with fears that other denominations might follow.
This uncertainty contributed to Indian interest in crypto (and also, to be fair, in other investments like gold and foreign real estate), making them prime targets for this man. He is currently in police custody. It is unclear exactly what charges will be brought against him, and whether or not he will be able to trade knowledge of the other conspirators’ whereabouts for some measure of leniency. But with any luck, at least one of them is now off the streets.
Image Courtesy: Bitcoin Exchange Guide