GainBitcoin fraud: India's biggest crypto ponzi scam may have cheated 1 lakh people of over Rs 1 tn

Cryptocurrencies including Bitcoin, Dash, Ethereum, Ripple and Litecoin are seen in this illustration picture. File Photo: Reuters/Florence Lo

New Delhi: The sheer size of the GainBitcoin scam that rocked the nation some time back is turning out to be way bigger than thought, with reports suggesting that around one lakh victims may have lost more than Rs 1 trillion in the scam.

With a total of 40 FIRs registered by victims (more than 13 FIRs in Maharashtra alone) and Punjab, a large number of people from other states may have also lost their hard-earned savings in the GainBitcoin scam.

Amit Bhardwaj, the mastermind who died of cardiac arrest earlier this year, may have collected Bitcoins anywhere between 385,000 to 600,000, amounting to more than Rs 1 trillion.

The amount may be even bigger as Bitcoin prices remain volatile and dropped from its all-time high of around $68,000 in November last year to around $21,000 as of now.

Taking the current Bitcoin price of around Rs 23,57,250 per Bitcoin, the total amount comes to nearly Rs 90,500 crore.

To date, more than 60,000 user IDs and email addresses have been traced by Pune police in the GainBitcoin case, according to multiple media reports.

Amit and his 'Seven Stars'

Like most ponzi schemes, GainBitcoin also had a pyramid, multi-level marketing scheme, with Amit Bhardwaj at the top and then his 'Seven Stars' who used to operate in India and abroad.

They guaranteed a 10 per cent monthly return in Bitcoin-on-Bitcoin deposits for 18 months via multi-level marketing programmes.

Investors were enticed to lend the corporation Bitcoins on the promise that their investments will be increased during the aforementioned period.

However, since there are a limited number of Bitcoins, the model was flawed, but several investors had put their money by the time they realized they had made a grave mistake.

With Amit gone, all eyes turn to Ajay

Currently, all eyes are on Ajay Bhardwaj, Amit's brother and the prime accused in the GainBitcoin scam.

In March, the Enforcement Directorate (ED) urged the Supreme Court to issue direction to one of the accused in the GainBitcoin scam to provide access, username and password, to his crypto wallet, contending that the issue of "legality of crypto currency" does not arise in the matter, as it is a ponzi scheme.

"The investigation conducted so far has revealed that Amit Bhardwaj (who died in January this year) with the connivance of petitioner, Vivek Bhardwaj, Mahender Bhardwaj and others i.e, multi-level marketing agents and associates have collected 80,000 bitcoins as proceeds of crime," said the ED affidavit.

The ED told the apex court that the brother of the petitioner has died, and he is in possession of the username and password of crypto wallets, which must be disclosed to the investigating officer. The petitioner's counsel submitted that some material is in custody of Pune police.

Next month, the Supreme Court pulled up Ajay Bhardwaj for not complying with its direction to divulge details of the username and password of cryptocurrency wallets to the ED.

Still, several crypto wallets belonging to the accused that were used for cryptocurrency collection purposes are yet to be traced.

Earlier this month, the ED raided six locations, including Delhi, as part of a large investigation into the alleged scamming of over 1 lakh investors.

The investigative agency seized numerous electronic devices and crucial papers, according to reports.

Numerous officers and attorneys linked with a Delhi-based law firm were also subject to raids, the reports said.

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