₹6,606 crore GainBitcoin fraud: CBI conducts searches at multiple locations across India

MUMBAI: The Central Bureau of Investigation (CBI) on Tuesday carried out extensive searches in around 60 locations across the country, including Pune, Nanded and Kolhapur, as part of its investigation into the Gainbitcoin cryptocurrency scam, a multi-crore Bitcoin-based multi-level marketing scheme allegedly run by private firm Variable Tech Pte Ltd.

The searches targeted premises linked to accused individuals, their associates and entities suspected of laundering money. “During searches, a few crypto wallets, incriminating digital evidence, and digital devices were seized,” said a CBI official, who requested anonymity as they aren’t authorised to speak to the media. Apart from three cities in Maharashtra, the agency conducted coordinated searches in the National Capital Region, Chandigarh, and Bengaluru, among other cities.

In December 2023, the Supreme Court had directed the CBI to take over the cases registered in connection with the alleged fraud. Multiple cases had been registered across the country, including in Maharashtra, Jammu and Kashmir, Punjab, Chandigarh, Delhi, West Bengal, Madhya Pradesh and Karnataka, alleging large-scale fraud and money laundering.

According to the police, GainBitcoin was a multi-level marketing scheme launched in 2015 by entrepreneurs Amit Bhardwaj (deceased) and Ajay Bhardwaj, and their network of agents. The scheme operated through several websites managed by a company named Variable Tech Pte Ltd, according to CBI officials.

The fraudulent scheme allegedly lured investors by promising monthly returns of 10% via Bitcoin for 18 months. Potential investors were encouraged to purchase the cryptocurrency from exchanges and invest it with GainBitcoin through cloud mining contracts. The scheme’s model followed a multi-level marketing structure, which is usually linked with pyramid-structured Ponzi schemes, where payouts were dependent on attracting new investors, CBI officials said.

Initially, the investors allegedly received the payouts in Bitcoin, but as the influx of new investments decreased by 2017, the scheme began to collapse. “In an attempt to cover up the losses, GainBitcoin unilaterally switched payouts to their alleged in-house cryptocurrency called MCAP, which had significantly less value than Bitcoin, further misleading investors, “ said the CBI official quoted earlier.

The CBI has taken over these cases and is conducting a comprehensive investigation to uncover the full extent of the fraud, identify all accused parties, and trace the misappropriated funds, including international transactions, the official said. In November last year, the CBI had summoned an employee of a Raipur-based audit firm for questioning in the case. “The CBI remains committed to ensuring a thorough and impartial investigation and bringing the perpetrators of this massive cryptocurrency fraud to justice, “ the official added.

The Enforcement Directorate’s Mumbai unit is also conducting its own money-laundering investigation into the case, in which the estimated proceeds of crime are allegedly worth ₹6,606 crore (based on 2017 figures). The agency’s probe found that a part of the funds sourced from the proceeds of crime were diverted abroad, for which it has sought assistance from foreign countries to trace and retrieve them. The ED suspects the funds collected via the scheme were diverted through nine foreign firms for purchasing overseas properties by the accused.

The ED initiated its investigation based on multiple cases registered by the Maharashtra police and Delhi police against Variable Tech Pte Ltd, the late Amit Bhardwaj and others.