The Central Bureau of Investigation (CBI) has seized cryptocurrencies valued at Rs.23.94 crore during an extensive probe into the GainBitcoin scam. This operation involved coordinated searches at over 60 locations across India, targeting key individuals and entities linked to the fraudulent scheme.
Nationwide Crackdown
The CBI’s two-day operation spanned multiple cities, including Mumbai, Pune, Nanded, Kolhapur, the National Capital Region, Chandigarh, Bengaluru, Mohali, Jhansi, and Hubli. The searches focused on premises associated with the accused, their collaborators, and entities suspected of money laundering. Officials reported the seizure of multiple hardware crypto wallets, 121 documents, 34 laptops and hard disks, 12 mobile phones, and various email and instant messaging app data.
Origins of the GainBitcoin Scam
Launched in 2015 by Amit Bhardwaj (now deceased) and his brother Ajay Bhardwaj, GainBitcoin operated as a multi-level marketing scheme under the company Variable Tech Pte Ltd. The scheme enticed investors with promises of a 10% monthly return in Bitcoin over 18 months. Participants were urged to purchase Bitcoin from exchanges and invest them through cloud mining contracts offered by GainBitcoin. The operation relied on a pyramid-like structure, where returns were generated from new investments rather than legitimate mining activities.
Collapse and Legal Proceedings
By 2017, as new investments dwindled, the scheme began to unravel. In an attempt to mitigate losses, GainBitcoin unilaterally switched payouts from Bitcoin to their in-house cryptocurrency, MCAP, which held significantly less value. This move further deceived and disadvantaged investors.
In December 2023, the Supreme Court of India directed the CBI to take over multiple cases related to the GainBitcoin fraud, consolidating investigations that had been initiated in various states, including Maharashtra, Jammu and Kashmir, Punjab, Delhi, West Bengal, Madhya Pradesh, and Karnataka.
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Magnitude of the Fraud
Estimates suggest that the GainBitcoin scam defrauded over 100,000 investors, with losses potentially exceeding Rs.1 trillion. Reports indicate that the Bhardwaj brothers amassed between 385,000 to 600,000 Bitcoins from unsuspecting investors.
Ongoing Investigations
The recent seizures by the CBI aim to trace misappropriated funds and uncover international transactions linked to the scam. The Enforcement Directorate (ED) is also conducting a parallel money-laundering investigation into the case. The ED’s probe has identified at least nine overseas firms, including entities in Hong Kong, Dubai, and Estonia, allegedly used to divert illicit gains.
The CBI’s recent actions underscore the Indian authorities’ commitment to combating cryptocurrency-related frauds and safeguarding investors’ interests.
