Life Sentences Handed Down: How Indian Court Dismantled a Bitcoin Extortion Ring Led by Police Officials

A landmark verdict in India’s fight against cryptocurrency crime has sent shockwaves through the nation’s law enforcement establishment. On Friday, an Ahmedabad court delivered one of its most severe judgments in a digital asset crime, sentencing 14 people—including 11 police officers and a former politician—to life imprisonment for orchestrating an elaborate Bitcoin kidnapping and extortion scheme.

The conspiracy that was hatched in 2018 targeted businessman Shailesh Bhatt and exposed a staggering level of institutional corruption within India’s police force. Special Judge B.B. Jadav found all defendants guilty of criminal conspiracy, kidnapping for ransom, illegal detention, and assault, marking a decisive moment in India’s ongoing battle against cryptocurrency-related crimes.

The Crime That Unraveled a Corruption Network

The roots of this case trace back to the collapse of BitConnect, a massive Ponzi scheme worth $900 million that devastated thousands of investors worldwide. When BitConnect imploded, Bhatt, a Surat businessman, managed to recover 752 Bitcoin from BitConnect developer Dhaval Mavani—a move that would make him a target for corruption.

In February 2018, corrupt officials learned of Bhatt’s substantial Bitcoin holdings. What followed was a meticulously executed plan: men posing as Central Bureau of Investigation agents lured Bhatt to a gas station under false pretenses. Within days, he was kidnapped and detained at Keshav Farm near Gandhinagar.

The operation involved some of Gujarat’s most powerful figures. Former Amreli district police superintendent Jagdish Patel—a senior IPS officer—orchestrated the scheme alongside ex-politician Nalin Kotadiya, who had represented the Dhari constituency in Gujarat’s legislative assembly from 2012 to 2017. Local crime branch inspector Anant Patel and multiple additional officers carried out the actual abduction.

At the farmhouse, Bhatt endured beatings and threats until he revealed the full extent of his crypto holdings. Of the 752 Bitcoin, 176 were stored with his business partner Kirit Paladiya, while he had already converted the remainder into approximately $5 million in fiat currency. The kidnappers initially demanded all 176 Bitcoin plus 32 crore rupees (roughly $3.6 million). When negotiations stalled, they forced Bhatt to execute 34 Bitcoin transfers from his partner’s wallet, netting the criminals around $150,000.

An Investigation Plagued by Witness Intimidation

After his release, Bhatt filed a complaint with India’s Union Home Ministry, triggering a massive criminal investigation by Gujarat’s Crime Investigation Department. The prosecution assembled a formidable case, presenting 173 witnesses including digital forensics specialists and bank officials who meticulously traced fund transfers.

However, the path to justice proved treacherous. An alarming 92 witnesses turned hostile during proceedings, recanting their testimony or withdrawing statements entirely. This pattern suggested systematic witness intimidation and possible corruption attempts to sabotage the trial. Judge Jadav responded decisively, issuing perjury notices to 25 witnesses who committed perjury in court.

Despite these obstacles, the prosecution successfully proved the criminal conspiracy through a combination of witness testimony and digital transaction records. Some police constables even became prosecution witnesses against their former superiors, demonstrating that not all within the force succumbed to intimidation.

The Conviction and Its Implications

All 11 police officers were convicted under India’s Prevention of Corruption Act, with the court emphasizing that public servants who abuse their authority for personal gain deserve the harshest penalties. The court ordered the confiscation of gold jewelry valued at approximately 2.4 crore rupees ($290,000) seized from former superintendent Patel, which will be transferred to Mumbai’s Master of Mint for processing.

Nalin Kotadiya, who had remained a fugitive for months, was apprehended in September 2018 and has now received his first life sentence, despite appearing in multiple corruption cases across Gujarat.

At current Bitcoin prices of $88,170, the 176 Bitcoin that criminals attempted to steal would be worth over $19 million—making this one of India’s largest cryptocurrency extortion attempts and underscoring why these digital assets have become prime targets for criminal networks.

A Cautionary Tale for the Crypto Ecosystem

This case reveals a sobering truth: cryptocurrency’s vulnerability lies not just in digital security but in physical exploitation. When criminals know the location of significant holdings, they can bypass encrypted wallets through intimidation and coercion. Bhatt became a target precisely because his Bitcoin reserves were known and seemingly vulnerable to forcible transfer.

The verdict sends a clear deterrent message to law enforcement and public officials considering similar schemes. Courts will prosecute cryptocurrency-related kidnapping and extortion with maximum severity, particularly when perpetrators abuse their positions of public trust.

The case also demonstrates India’s judicial system’s capacity to handle complex cryptocurrency crimes despite substantial obstacles. Winning convictions against powerful officials, managing massive witness pools affected by intimidation, and building cases on digital forensics and financial records requires institutional resilience—which the Ahmedabad court ultimately displayed.

An Unexpected Complication

Adding layers of complexity to this narrative, Bhatt himself faces criminal charges. India’s Enforcement Directorate arrested him in August 2024 for allegedly kidnapping two BitConnect promoters and extorting 2,091 Bitcoin, 11,000 Litecoin, and 14.5 crore rupees in cash. This revelation suggests that in the aftermath of BitConnect’s collapse, multiple parties engaged in illegal methods to recover losses, blurring the lines between victim and perpetrator.

His case continues through Indian courts, representing the murky ecosystem of cryptocurrency-related crimes that emerged following BitConnect’s downfall. What began as a case of police corruption evolved into a broader indictment of how desperate investors have resorted to extortion and violence in attempting to recover stolen wealth.

The life sentences imposed on the 14 defendants represent a watershed moment for India’s approach to digital asset crimes and official corruption. The verdict reinforces that neither power nor position can shield perpetrators from accountability in cryptocurrency-related offenses.