Business 16 July 2018

Erik Gibbs

Police in India crack $300M GainBitcoin scam

Indian police investigators working on the GainBitcoin Ponzi scheme, which cost investors around $300 million, are saying that they have made great strides in solving the case. They report the possession of “crucial clues” on how the swindlers were able to launder the proceeds, and are closing in on the suspects.

The Indian Express media outlet reported last Friday that investigators in Gujarat have been continuously probing the scam and were able to extract valuable details from Amit Bharadwaj, one of the prime suspects in the case. Those clues have led the investigators to piece together details on how the alleged scammers were able to operate over the years.

Bharadwaj has been subjected to interrogation by five different states in the country. However, only the latest investigative team out of Pune has been able to make any headway, gleaning information from Bharadwaj and seven other accused who allegedly worked as GainBitcoin agents.

GainBitcoin came under fire in April following the submission of two First Information Reports (FIR) against the company. When a third FIR was submitted in a different city, authorities deduced that there was a multi-city criminal organization pulling off a major fraud.

Bharadwaj was picked up following a complaint lodged in Pune in May 2018, the report noted. He has provided details about how the group has been able to thwart Indian customs officials while shifting funds to countries such as China, Dubai and Hong Kong. According to a police officer involved in the case, “The clues about money laundering have been communicated to the Enforcement Directorate. The probe shows that Bhardwaj and his aides had set up an elaborate MLM system by luring investors to hand him [BTCs] in the promise of higher returns. This money was later diverted to bigger international markets and other money siphoning methods.”

GainBitcoin’s activities began to come to light following a police raid on an Ethereum mining installation on May 9. That installation had reportedly taken around $15 million from investors and led to a second raid in Dehradun, near Delhi, where 100 mining computers and 500 graphics cards and servers were seized.

Per one victim’s account, he was swindled after investing 0.1 BTC in July 2017. He was promised a return of 12% monthly for the duration of an 18-month contract. In order to earn an additional 12% monthly, as promised by the scam operators, he began bringing in more investors. However, he was never paid and the operators stopped responding to calls. Employees working for GainBitcoin asserted that the operators had fled to Dubai with all of the investors’ money.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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