The Central Bureau of Investigation (CBI) of India has escalated its actions in a nationwide initiative, targeting over 60 locales that span from the bustling urban centers of Delhi NCR, Pune, Chandigarh, and Bengaluru to the quieter districts of Nanded and Kolhapur. This extensive operation forms the backbone of the probe into the intricate $800 million (approximately ₹6,600 crore) fraud scheme colloquially known as GainBitcoin.
Founded in 2015 by Amit Bhardwaj and his brother Ajay, GainBitcoin emerged under the corporate guise of Variabletech Pte. Ltd., touting the potential for substantial monthly returns of 10% in Bitcoin via “cloud mining contracts.” However, the operation’s legitimacy plummeted following Amit Bhardwaj’s death in 2022, unmasking a complex web of deceit that spanned across international borders.
The CBI has expressed its intention to conduct a thorough investigation aiming to delineate the fraud’s utmost extent, identify all individuals implicated, and map out the intricate flow of misappropriated funds, including any transfers that crossed international lines. In their statement released on a Tuesday, the agency highlighted the seizure of significant digital evidence — from crypto wallets to cloud data — all pivotal in tracking the diverted funds, some of which have been allegedly laundered internationally.
Industry experts, including Sudhakar Lakshmanaraja, the founder of the blockchain education platform Digital South Trust, have vocalized the pressing need for stringent regulations and enhanced investor protection mechanisms within India’s burgeoning crypto sector. According to Lakshmanaraja, despite regulatory efforts, multi-level marketing (MLM) based frauds persistently exploit legislative gaps and the general public’s lack of awareness, undermining trust and security in the digital asset domain.
The GainBitcoin scam, with its MLM architecture reminiscent of a pyramid scheme, rewarded participants not merely for their sales but also for the sales executed by their recruits. Initially, investors received payments in Bitcoin, but as the fraudulent structure unraveled in 2017, payments shifted to an in-house cryptocurrency — MCAP — significantly less valuable, leaving investors with virtually worthless digital assets.
A significant development in the investigation occurred in March 2022 when the Indian Supreme Court intervened, compelling Ajay Bhardwaj to disclose the crypto wallet details of his late brother. This move was aimed at unraveling the fraud’s magnitude and tracing the laundered proceeds more effectively.
In broadening their investigative scope, the CBI has amalgamated multiple First Information Reports (FIRs) from various jurisdictions, including Jammu & Kashmir, Punjab, Delhi, West Bengal, Karnataka, and Maharashtra, into a unified investigation, signaling a fortified stance against cryptocurrency-related fraud in India.
This crackdown is indicative of a larger trend toward rigorous enforcement and regulatory oversight within India’s crypto ecosystem. Recent police actions in Mumbai against the managing director of the Indian crypto trading platform Coin ZX, for an alleged fraud amounting to $23 million (Rs 200 crore), and the Indian Enforcement Directorate’s operations against illegal crypto conversions totaling $72 million (₹600 crore), underscore the government’s determination to cleanse the sector of fraudulent activities.
By ramping up efforts to ensure accountability and safeguard investors, the Indian authorities underscore the balancing act of fostering innovation while ensuring a secure and regulated environment for digital assets. The ongoing investigations and regulatory measures reflect a commitment to establishing a transparent, fraud-free digital asset ecosystem in India, according to Vedang Vatsa, Founder of the global crypto community Hashtag Web3.