Gujarat Relative of main accused among 2 held by ED in Bitcoin-linked money laundering case

Ahmedabad, Jan 20 (PTI) The Enforcement Directorate (ED) on Tuesday arrested two individuals, including a nephew of the main accused, who is a Surat-based builder, in connection with a money laundering probe linked to the 2018 multi-crore Bitcoin extortion case.
    Nikunj Bhatt and Sanjay Kotadiya were produced before a special PMLA court after they were arrested. The court remanded them to the ED's custody till January 24, said their lawyer Aniq Shaikh.
    The ED stated that Nikunj Bhatt's custodial interrogation is necessary as he still possesses knowledge of cryptocurrency wallet credentials, private keys and exchange accounts. The federal agency wants to trace remaining proceeds of crime, identify beneficiaries, and prevent tampering with digital evidence.
    The investigating agency has not provided details regarding Kotadiya.
    The arrest of Nikunj and Kotadiya is based on an FIR registered under the Prevention of Money Laundering Act by the state CID against Surat-based builder Shailesh Bhatt in 2018 for his alleged role in kidnapping an employee of a crypto firm and extorting 2,291 Bitcoin, worth Rs 260 crore at that time.
    As per the case documents submitted to the court by the ED, Shailesh Bhatt had invested Rs 1.7 crore in a cryptocurrency platform, named BitConnect Coin, floated by Satish Kumbhani, who had promised lucrative returns to Bhatt and other investors.
    However, when Kumbhani suddenly shut down the operations, Shailesh Bhatt hatched a plan to recover his investment by kidnapping Kumbhani's employees.
    In February 2018, Shailesh Bhatt and his associates forcibly extorted cryptocurrency assets and cash from Kumbhani's former employee, Dhaval Mavani, who had access to the cryptocurrency wallet of Bitconnect.
    The extorted assets included 2,291 Bitcoins, 11,000 Litecoins, and approximately Rs 14.5 crore in cash, as per the documents.
    Nikunj Bhatt, a nephew of the main accused, Shailesh Bhatt, had attended meetings where the kidnapping-extortion conspiracy was allegedly planned.
    The ED stated that Nikunj had also accompanied Shailesh Bhatt during extortion and later received a portion of the cryptocurrency proceeds.
     As per statements recorded under Section 50 of the PMLA, Nikunj Bhatt admitted to receiving 260 Bitcoins from Shailesh Bhatt. Of these, he transferred 19.99 Bitcoins to his Binance wallet and returned 240 Bitcoins to Shailesh Bhatt within a few days.
    Out of the Bitcoins transferred to the Binance account, 10.92 Bitcoins were seized earlier by the Surat Crime Branch, while the remaining amount was allegedly lost in trading activity on the exchange.
    The ED's forensic analysis of cryptocurrency wallets revealed that at least 200 Bitcoins were transferred from Shailesh Bhatt's wallet to a Binance wallet held in the name of Sunil Ratilal Vagh.
     The ED stated that this account was opened and controlled by Nikunj Bhatt using KYC documents of Vagh without his knowledge.
     The federal agency further stated that the cryptocurrencies deposited in the Binance account were part of the proceeds of crime. As per the ED, these funds were later transferred to another individual based in Mumbai, following instructions from Shailesh Bhatt.
     Statements recorded during searches conducted in June 2025 indicated that Sunil Vagh was unaware of the Binance account opened in his name and didn't operate or control it.
    The ED believes Nikunj Bhatt concealed his role as the real beneficiary and controller of the account by using pseudonymous email addresses and phone numbers.
    Earlier, Nikunj Bhatt didn't disclose the creation of the Binance user ID, receipt of cryptocurrencies, or his association with a Dubai-based entity.
    The ED alleged Nikunj Bhatt didn't cooperate fully with the investigation, failed to provide details of counterparties involved in cryptocurrency transactions, and attempted to divert and obstruct the probe by giving false, incomplete or evasive statements.
    The agency also pointed to the undisclosed acquisition of immovable properties in the name of a partnership firm, Maruti Enterprises, in which Nikunj Bhatt is a partner. The funds for these properties were allegedly arranged by Shailesh Bhatt.

(This story has not been edited by THE WEEK and is auto-generated from PTI)