India’s Central Bureau of Investigation (CBI) is conducting raids across the seventh-largest country in the world in connection to the infamous GainBitcoin scam from 2015.
On Tuesday, 25 February, the bureau announced that it began the raids at more than 60 locations in the nation’s major cities. These include Delhi, Pune, Bengaluru, Kolhapur, Chandigarh, and Nanded, among others.
These locations, says the press release, are connected to key suspects, their associates, and related entities. These suspects have allegedly laundered the proceeds of the GainBitcoin Ponzi scheme.
According to The Economic Times, the scammers took some ₹6,600 crore ($756.48 million), while other sources claim there are thousands of victims involved.
The police initially seized “digital evidence” and digital devices, as well as crypto wallets and evidence found in emails and the “cloud.” They described these as “incriminating” but did not provide specifics.
Source: CBI, TwitterHowever, according to the latest update on 26 February, following a two-day search, the police confiscated $2.75 million in crypto.
Additionally, it seized multiple crypto wallets, 34 laptops and hard disks, and 12 mobile devices, as well as a number of documents, emails, and app messages.
The CBI is still conducting an investigation into this crime. They aim to uncover the full extent of the fraud, identify all connected parties, and “trace misappropriated funds, including international transactions.”
The Scheme Collapsed in 18 Months
Amit and Ajay Bhardwaj launched GainBitcoin in 2015. Amit Bhardwaj passed away in January 2022 while on bail.
The two joined hands with a “network of agents” to advance their scheme. The alleged conspirators engaged in wide-ranging actions to convince people to invest in their company, with a promise of 10% return on their investments.
More precisely, the scammers instructed their victims to buy Bitcoin (BTC) on exchanges and put them in GainBitcoin via “cloud contracts.”
As typical Ponzi schemes work, the scammers would pay old investors with the money they’d take from new investors – never making any actual profit for the investors. Much of the funds, they’d keep for themselves.
Also as is typical for Ponzi schemes, new investors eventually run out. By 2017, GainBitcoin couldn’t cover up their losses so they “unilaterally switched payouts to their alleged in-house cryptocurrency” MCAP, which was far less valuable than BTC. This, said the authority, was another instance of misleading investors.
The arrests began following multiple First Information Report (FIR) filings with the police.
Meanwhile, in April 2018, the Pune city police confirmed that they arrested eight people in connection to this scheme. The suspects had engaged in various advertising methods and motivational seminars to entice people to invest in GainBitcoin.
The 32 BTC and 79.99 ETH the investigators found at the time were transferred to the Pune police’s mobile wallet.
The investigation is ongoing.
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