New Delhi: The Central Bureau of Investigation (CBI) Tuesday arrested Ayush Varshney, a key accused in the multi-crore GainBitcoin scam, who was allegedly planning to flee to Colombo, Sri Lanka, ThePrint has learnt. Varshney is the co-founder of Darwin Labs, a company that allegedly provided technical support and consulting services to GainBitcoin.
This is the first arrest by the agency in the scam, which is now estimated to be worth at least Rs 20,000 crore and involve 29,000 mined bitcoins. The investigation spans across India. “The arrest was made based on a Look Out Circular. He was detained at the airport,” a source said.
GainBitcoin was an alleged Ponzi scheme launched in 2015 by a person named Amit Bhardwaj (now dead), along with his brother Ajay Bhardwaj and their network of agents. The scheme operated through multiple websites such as www.gainbitcoin.com etc., under the facade of a company named Variabletech Pte. Ltd.
According to sources in the agency, the fraudulent scheme lured investors by promising lucrative returns of 10 percent a month in Bitcoin for 18 months. Promotional events for the scheme were also conducted in Dubai and Macau during 2017 and 2018 to trap investors.
“Investors were encouraged to purchase Bitcoin from exchanges and invest them with GainBitcoin through ‘cloud mining’ contracts. 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,” a CBI officer said.
Investors received payouts in Bitcoin at first but that began dwindling by 2017. 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 officer explained.
In February last year, the agency conducted extensive searches at over 60 locations across India in connection with the case. Searches were carried out in major cities, including Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur, Bengaluru, and others. Multiple First Information Reports were registered across India, alleging large-scale fraud and money laundering.
In December 2023, given the scale of the scam, cases registered in various states, including Jammu & Kashmir, Punjab, Chandigarh, Delhi, West Bengal, Madhya Pradesh, Karnataka, and Maharashtra, were transferred to the CBI by the Supreme Court of India. The Enforcement Directorate is also probing the money laundering aspect of the case and has attached properties in India and overseas, including six offices in Dubai.
The ED had also attached seized high end cars including Mercedes, Audi Q3 of accused Ajay Bhardwaj and Mahender Bhardwaj who had managed to escape from their residence. The directorate’s investigation has also revealed that these hawala operators were using crypto currency including Bitcoin, Ethereum, USDT, Tron etc. for hawala operations. The investigation also revealed complex crypto hawala transactions of both national and international nature, intricately linked to the GainBitcoin promoters wherein accused had liquidated large amount of cryptocurrency to Indian rupees, a statement from the ED said.
Main accused Ajay Bhardwaj and Mahender Bhardwaj are still absconding. The ED had earlier attached properties worth Rs 69 crore and has also sought assistance from foreign countries to trace the proceeds of crime. In April 2024, ED also attached immovable and movable properties worth Rs 97.79 crore belonging to Raj Kundra under in connection with the case. These included a residential flat in Juhu, presently in the name of Kindra’s wife Shilpa Shetty, a bungalow in Pune and equity shares in the name of Raj Kundra.
(Edited by Nardeep Singh Dahiya)
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