Bitcoin Scam India: Former BJP Politician Arrested in $1.3 Million Bitcoin Extortion Case


Indian investors lost an approximate of 22,000 Crore in the Bitconnect scam and ever since the scam and its scale was uncovered, the name of the former BJP MLA Nalin Kotadiya cropped up quite often. Kotadiya has finally been arrested for an alleged involvement with the kidnapping syndicate of Shailesh Bhatt.

In May this year, during the interrogation of Kirit Paladiya, Kotadiya was fingered as an accomplice. The accuse evaded arrest until Sunday, September 09. As reported by ANI, the Ahmedabad Crime Branch police arrested him from Maharashtra’s Dhuliya. The ex-MLA is being indicted as an offender in the Rs 9.95 crore bitcoin extortion case of Surat.

Following the arrest, a resolution for the case is expected to speed up. The court declared Kotadiya wanted after he failed to turn up for questioning following a summon. The summon was due to an application filed by CID (Crime) with respect to the above-mentioned offense.

The Case

In March, Shailesh Bhatt, a Surat-based realtor lodged a complaint alleging some policemen for abduction and extortion of about 200 coins. After a dozen cops were arrested the name of  BJP MLA Nalin Kotadiya cropped in around July. A true Holywood style twist of the tale was introduced when the investigating officers discovered that Bhatt himself had abducted a BitConnect promoter to extort 2,256 Bitcoins.

The whole master plan went south when one of Bhatt’s alleged partners in crime, Kotadiya’s nephew, Kirit Paladiya, connived with SP Jagdish Patel and others to extort the crypto-currency from Bhatt and to share the spoils. However, Kotadiya claimed innocence over the allegations, claiming that he was being framed.

The Issue

The bitconnect scam is not an isolation, the peer-to-peer payment systems have been taken advantage of by criminals in different known cases within the ecosystem. Notably, in a number of cases, hackers have demanded ransom in the form of digital token over attacks on premium websites and platforms.

This is what has attributed to distrust of various governments over the whole cryptocurrency ecosystem. While not totally impossible, but cryptocurrency inclined financial crimes are quite complicated and thus most regulators demand KYC compliance from exchanges and their clients.

However, a KYC largely reduces the anonymity involved in dealing with cryptocurrencies, which in turn affect the decentralized characteristics of digital payment systems. The market, the enthusiasts and the governments are in a constant debate to find a mid-way for the issue.

Coming back to the Kotadiya’s arrest, while it seems that the local Indian police have stepped closer to solving the twisted tale, it is also a possibility that the tale gets further twisted.

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