CBI Raids Target GainBitcoin Scam

India’s Central Bureau of Investigation (CBI) has conducted raids at 60 locations across the country, including cities such as Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur, and Bengaluru, as part of its investigation into the $800 million (₹6,600 crore) GainBitcoin scam.

Launched in 2015 by Amit Bhardwaj (who passed away in 2022) and his brother Ajay Bhardwaj, GainBitcoin operated under Variabletech Pte. Ltd., promising investors lucrative returns of 10% monthly in Bitcoin (BTC) through “cloud mining contracts.”

The CBI stated, “CBI took over these cases and conducted 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.”

During the raids, the CBI seized incriminating digital evidence, including crypto wallets, emails, and cloud data crucial for tracing the funds—some allegedly laundered across international borders.

Sudhakar Lakshmanaraja, founder of the blockchain education platform Digital South Trust, spoke to Decrypt about the urgent need for stronger regulations and investor protection in India’s crypto industry. He noted, “Despite regulatory scrutiny, MLM-based scams continue to thrive by exploiting loopholes and public ignorance.”

The GainBitcoin scam employed a multi-level marketing (MLM) structure, a type of pyramid scheme where participants earn commissions not only for their direct sales but also from their recruits’ sales. Initially, investors were paid in Bitcoin, but as the scheme collapsed in 2017, GainBitcoin switched to an in-house crypto called MCAP, which was considerably less valuable, leaving many investors with worthless digital currency instead of the promised Bitcoin.

In March 2022, the investigation took a significant turn when the Indian Supreme Court ordered Ajay Bhardwaj to disclose details about his deceased brother’s crypto wallet, stating that the username and password were crucial for understanding the fraud scale and tracking proceeds.

The CBI has consolidated multiple FIRs registered in various states, including Jammu & Kashmir, Punjab, Delhi, West Bengal, Karnataka, and Maharashtra, into one investigation.

India Ramps Up Crypto Enforcement

The investigation into GainBitcoin is part of a trend of increased enforcement and regulatory action within India’s crypto ecosystem. Last week, Mumbai police booked Ravi Mahaseth, managing director of Coin ZX, for allegedly defrauding investors out of $23 million (Rs 200 crore). This followed several complaints against Coin ZX, which had promised returns on Bitcoin investments but stopped payments after a few months.

The Indian Enforcement Directorate (ED) has also launched a crackdown on crypto fraud, conducting searches in Delhi, Jaipur, and Mumbai in connection with a scam involving $72 million (₹600 crore) in illegal crypto conversions. This operation links to Chirag Tomar, who is currently imprisoned in the U.S. for defrauding investors of more than $20 million by spoofing the Coinbase website and stealing user credentials to transfer funds to his own wallets.

Vedang Vatsa, Founder of global crypto community Hashtag Web3, commented on the government’s commitment to tackling crypto fraud, stating it demonstrates accountability and puts investor protection first. He emphasized the need for balanced regulations to create a secure environment while promoting innovation in India’s digital asset ecosystem.