CBI conducts raids at 60 locations in Rs 6,600 cr GainBitcoin crypto scam

The CBI on Tuesday conducted countrywide coordinated searches at 60 locations as part of its probe into Rs 6,600 crore GainBitcoin cryptocurrency scam, officials said.

The searches were spread across multiple cities including Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur and Bengaluru, targeting premises allegedly linked to key accused individuals, a CBI spokesperson said in a statement. 

The ponzi scam perpetrated through a web of platforms, including flagship site www.gainbitcoin.com, was allegedly masterminded by Amit Bhardwaj (now deceased) and his brother Ajay Bhardwaj, the officials said.

Launched in 2015, the illicit operation was camouflaged under the facade of Variabletech Pte. Ltd, they said.

The scheme lured the investors offering extraordinary returns of 10 per cent per month in Bitcoin over an 18-month period urging them to purchase the digital currency from external exchanges and deposit it with GainBitcoin through "cloud mining" contracts, the central agency said.

"The model followed a multi-level marketing (MLM) structure, commonly associated with pyramid structured ponzi schemes, where payouts were dependent on bringing in new investors," the spokesperson said.

In its early days, investors received payouts in Bitcoin, fuelling the illusion of a lucrative venture. However, as the influx of new capital dwindled by 2017, the charade began to crumble.

"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," the statement said.

The sheer scale and complexity of the scam resulted in registration of multiple FIRs filed across India, from Jammu and Kashmir to Maharashtra and from Delhi to West Bengal.

The Supreme Court handed over the investigation to the Central Bureau of Investigation (CBI), due to the expansive nature of the operation and the international ramifications it entailed.

"CBI took over these cases and is conducting an omnibus and comprehensive investigation to uncover the full extent of the fraud, identify all accused parties, and trace the misappropriated funds, including international transactions," the statement said.

The agency has launched a probe to unravel the full extent of the fraudulent activities, identify all implicated parties, and trace the misappropriated funds, including those that may have crossed borders.

"During searches, few crypto wallets, incriminating digital evidences and digital devices have been seized. The evidences present in emails/clouds have also been seized," the agency said.