A spokesman for the Congress party claimed on Thursday that a "mega bitcoin scam" involving at least $735 million has been at the center of the political scene in Gujarat, with politicians from Congress' rival Bharatiya Janata Party (BJP), a Hindu nationalist party, reportedly orchestrating a multi-layered scheme, according to local reports.
Indian Prime Minister Narendra Modi is a member of the BJP and served as chief minister of Gujarat from 2001 to 2014.
"A new mega-bitcoin scam has been unraveled in Gujarat," Congress spokesperson Shaktisinh Gohil told reporters Thursday. "The finger of suspicion of this massive scam of illegal cryptocurrency directly points to several top Bharatiya Janata Party leaders and a mastermind — an absconding BJP leader and former MLA [member of the legislative assembly] Nalin Kotadiya," Gohil said, according to NDTV. Kotadiya is a Gujarati politician who joined the BJP when his own Gujarat Parivartan Party merged with it in 2014, Niti Central reported at the time.
The scam is nothing short of a "Pandora's Box" in which "illegal hawala transactions [an Islamic system for transferring money based on the honor code], kidnappings and extortion of cryptocurrency using government authorities at the behest of top BJP leaders in Gujarat are a norm," Gohil argued. Gujarat is India's westernmost state and home to some 62 million residents.
Indian State Police have also found "that the mastermind of this scam was Nalin Kotadiya," Gohil said.
Congress has claimed that BJP was covering up income earned from crimes coordinated with local police by converting it into bitcoin, which provides a thin, partial layer of anonymity to users seeking to transfer value.
Bitcoin's distributed ledger records all transactions that take place across its network, meaning that if BJP leaders truly created a convoluted money trail using bitcoin, there is already a record of the transactions on bitcoin's ledger.
Gohil maintains that the scheme originated with Shailesh Bhatt, a real estate developer based in Surat, who filed a complaint in April charging that district police extorted 200 bitcoins (about $1.3 million) and $4.7 million in cash from him. An investigation into local police the same month found that they had engaged in extortion, Gohil said.
According to Gohil, the scheme is far-reaching, with millions of dollars appearing in banks "linked with Gujarat BJP leaders." Further, he said BJP leaders have used cryptocurrency and demonetization to cover up black money.
BJP spokesperson Anil Baluni has laughed off the allegations of wrongdoing, saying they are baseless. It is the Congress Party, Baluni says, that has indulged in "dirty tricks" by spreading lies about the police, "which has uncovered the case."