Summary
- The Central Bureau of Investigation (CBI) is conducting raids across India related to the GainBitcoin scam, which defrauded 8,000 investors of $75.8 million.
- The scheme, launched in 2015 by the Bhardwaj brothers, promised high returns through “cloud mining” contracts but collapsed when payouts switched to a less valuable cryptocurrency.
- The CBI has made eight arrests and remains committed to holding all responsible parties accountable for the fraud.
India’s Central Bureau of Investigation (CBI) is currently conducting a series of nationwide raids about the infamous GainBitcoin scam, which misled 8,000 investors by falsely promising substantial returns in Bitcoin.
On February 25, the CBI announced the execution of searches across over 60 locations throughout India, targeting properties associated with the key suspects of the eight-year-old Ponzi scheme, which involved a total of 6,606 crore Indian rupees (approximately $75.8 million).
GainBitcoin Scam History
The fraudulent GainBitcoin scheme was purportedly launched in 2015 by Amit Bhardwaj (deceased) and his brother Ajay Bhardwaj, who was supported by a network of agents. The scheme operated under the name Variabletech Pte. Ltd. and was promoted through several websites.
The scam attracted investors by promising them 10% monthly returns in Bitcoin over 18 months. Investors were encouraged to purchase Bitcoin through exchanges and invest it with GainBitcoin via “cloud mining” contracts. The model followed a multi-level marketing (MLM) structure, typically seen in pyramid-like Ponzi schemes, where the distribution of profits relied on recruiting new investors.
At first, the scheme paid out in Bitcoin. However, as the influx of new investments slowed by 2017, the operation began to collapse. To mask the increasing losses, GainBitcoin shifted to paying out in a proprietary cryptocurrency called MCAP, which had a much lower value than Bitcoin, thereby further deceiving investors.
Numerous FIRs were filed across India, accusing the operation of large-scale fraud and money laundering. Due to the wide-reaching nature of the scam, cases in various states—including Jammu & Kashmir, Punjab, Delhi, West Bengal, Madhya Pradesh, Karnataka, and Maharashtra—were handed over to the CBI by India’s Supreme Court.
The GainBitcoin scam was orchestrated by the Bhardwaj brothers—Amit, a well-known Bitcoin advocate, and his brother Vivek, who marketed the fraudulent scheme. The brothers were charged with defrauding approximately 8,000 investors through GainBitcoin, a platform for Bitcoin trading and mining that was established in 2013.
According to the CBI, the fraudulent scheme “enticed investors with promises of 10% monthly returns in Bitcoin for 18 months. Investors were instructed to buy Bitcoin from exchanges and invest it in GainBitcoin through ‘cloud mining’ contracts.”
The brothers were arrested in 2017 following multiple FIR filings. Amit Bhardwaj was identified as the mastermind behind the scheme, while Vivek Bhardwaj played a significant role in promoting it at cryptocurrency events.
Indian authorities continue their investigation
As of now, eight individuals have been arrested in connection with the GainBitcoin fraud. Amit Bhardwaj passed away in January 2022 due to a cardiac arrest while on bail.
Police Commissioner Rashmi Shukla commented that the Bhardwaj brothers exploited the general public’s lack of understanding of cryptocurrencies. They often gathered funds intended for Bitcoin purchases but instead used the money to buy equivalent amounts of Ether (ETH) and MCAP tokens, pocketing the difference.
The CBI has committed to pursuing a thorough investigation, determined to ensure that all individuals involved in the “massive cryptocurrency fraud” are held accountable and brought to justice.
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