Bitcoin-based Ponzi scheme case: ED arrests Delhi businessman Nikhil Mahajan

The Enforcement Directorate (ED) has arrested Delhi businessman Nikhil Mahajan, 39, in connection with a money laundering probe into proceeds of crime from a bitcoin-based alleged Ponzi scheme. Singapore-based Variable Tech and its promoters allegedly operated the scheme with estimated proceeds of around ₹6,606 crore.

People aware of the matter said Mahajan allegedly helped the accused in propagating and promoting the alleged scam by conducting seminars in Dubai to attract investors and allegedly received 40 bitcoins.

As per current rates, a bitcoin can cost around ₹35 lakh. Bitcoins are not legal tender.

“Nikhil Mahajan, along with co-accused Ajay Bhardwaj, are in continuous possession of the proceeds of crime and are concealing the same. Thus, Nikhil Mahajan is an active participant of the wider conspiracy of this scam and has actively participated in the acquisition of the proceeds of crime and is in continuous enjoyment of the proceeds of crime, “ said a person, requesting anonymity.

A special court in Mumbai on Wednesday remanded Mahajan, who runs an event management firm, in the ED custody a day after his arrest.

The people cited material collected during the investigation and said Mahajan needs to be investigated for the alleged activity connected to the proceeds of crime including concealment, possession, acquisition, and usage. The ED is expected to question Mahajan as an alleged active participant of the wider conspiracy, the people said.

The ED initiated an investigation into the scheme in 2018 based on multiple cases registered in Maharashtra and Delhi against Variable Tech, late Amit Bhardwaj, Ajay Bhardwaj, Vivek Bhardwaj, Simpy Bhardwaj, Mahender Bhardwaj and other marketing agents.

Variable Tech allegedly lured investors by promising them high returns (10% monthly) in the form of the company’s cryptocurrency. The accused allegedly collected 80,000 bitcoins (valued at ₹6,606 crore as of November 2017) from unsuspecting investors. Thousands of investors lost their life savings after converting them into bitcoins to invest in the scheme. All the bitcoins were allegedly siphoned off.

The person quoted above said bitcoins were nothing but proceeds of crime, which the accused have layered and concealed in obscure online wallets that are not disclosed. “Instead of returning these bitcoins to the investors, the same is being concealed and utilised by the accused.”

The ED arrested Delhi businessman Nitin Gaur in December in the case. Gaur is the brother-in-law of Ajay Bhardwaj, who is the main accused, and on the run. Bhardwaj’s wife Simpy was also arrested in December.