The Central Bureau of Investigation (CBI) conducted extensive searches on Tuesday in approximately 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.
Locations connected to accused people, their associates, and organizations suspected of money laundering were the main focus of the searches. A CBI official stated, "A few crypto wallets, incriminating digital evidence, and digital devices were seized during searches." In addition to three Maharashtra cities, the agency conducted coordinated searches in Bengaluru, Chandigarh, and the National Capital Region.
The Supreme Court ordered the CBI to take over the cases filed in relation to the purported fraud in December 2023. Allegations of widespread fraud and money laundering were made in a number of cases filed throughout the nation, including in Madhya Pradesh, Karnataka, Punjab, Chandigarh, Delhi, West Bengal, Maharashtra, and Jammu and Kashmir.
According to the police, GainBitcoin was a multi-level marketing scheme founded in 2015 by entrepreneurs Amit Bhardwaj (deceased) and Ajay Bhardwaj, as well as their network of agents. According to CBI officials, the scheme operated through several websites managed by a company called Variable Tech Pte Ltd.
The fraudulent scheme allegedly enticed investors by promising 10% monthly returns on Bitcoin for 18 months. Potential investors were encouraged to buy the cryptocurrency on exchanges and then invest it with GainBitcoin via cloud mining contracts. According to CBI officials, the scheme's model used a multi-level marketing structure similar to pyramid-structured Ponzi schemes, with payouts dependent on attracting new investors.
Initially, the investors allegedly received payouts in Bitcoin, but as the number of new investments decreased by 2017, the scheme began to fail. "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.
The CBI has taken over these cases and is conducting a thorough investigation to determine the full scope of the fraud, identify all accused parties, and track down the misappropriated funds, including international transactions, according to the official. In November of last year, the CBI 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," said a government spokesperson.
The Enforcement Directorate's Mumbai unit is investigating a money-laundering case with estimated proceeds of ₹6,606 crore (2017 figures). The agency's investigation discovered that a portion of the funds derived from the proceeds of crime were diverted abroad, and it has sought assistance from foreign countries to trace and recover them. The ED suspects that funds from the scheme were diverted through nine foreign firms to purchase overseas properties by the accused.
The ED launched an investigation based on multiple cases filed by the Maharashtra and Delhi police against Variable Tech Pte Ltd, the late Amit Bhardwaj, and others.
