The Central Bureau of Investigation (CBI) has made a significant breakthrough in one of India's largest cryptocurrency frauds, known as the 'GainBitcoin' scam, by arresting Ayush Varshney. Varshney, the co-founder of Darwin Labs, is accused of playing a pivotal role in the alleged ₹20,000 crore fraud. According to officials, the accused was attempting to flee to Colombo, Sri Lanka, when he was intercepted at the airport based on a Look Out Circular (LOC) issued against him. This arrest is the first major action taken by the CBI since it took over the investigation into the multi-state fraud case.
Background of the GainBitcoin Fraud
According to investigative records, the GainBitcoin scheme was launched around 2015 by Amit Bhardwaj (now deceased), his brother Ajay Bhardwaj, and several associates. The scheme targeted thousands of investors across the country by promising high returns through bitcoin mining. Amit Bhardwaj was identified as the mastermind behind the operation, which allegedly siphoned off thousands of bitcoins from unsuspecting individuals. Following his death, the investigation shifted focus toward his key associates and the technical infrastructure that supported the fraudulent activities.
Modus Operandi: The MLM Ponzi Model
Investigators state that the GainBitcoin scheme operated as a classic Ponzi scheme disguised as a legitimate cryptocurrency mining venture. It utilized a Multi-Level Marketing (MLM) model where investors were promised a guaranteed monthly return of up to 10% on their investments. Participants were encouraged to purchase bitcoins from exchanges and invest them in the company's cloud mining contracts. To ensure rapid growth, the scheme offered additional commissions and bonuses to existing investors for bringing in new members, leading to a massive expansion across cities like Delhi-NCR, Pune, Chandigarh, and Bengaluru.
Transition to MCAP Token and Investor Losses
In the initial stages, the company reportedly made payments in bitcoin to build trust among its user base. However, by 2017, the payout system began to collapse. According to the investigation, when investors demanded their original bitcoin investments back, the company unilaterally shifted the payment mode to its own proprietary cryptocurrency called 'MCAP'. The value of MCAP was Notably lower than that of bitcoin, resulting in massive financial losses for the investors. It's estimated that approximately 29,000 bitcoins were involved in the entire fraudulent operation.
Nationwide Raids and Supreme Court Intervention
Due to the scale of the fraud and the involvement of multiple states, the Supreme Court of India directed the CBI to take over all related FIRs in December 2023. Following the court's order, the CBI conducted extensive raids at over 60 locations across the country, including Delhi, Pune, Nanded, Kolhapur, and Chandigarh. During these operations, the agency seized various digital devices and documents. The CBI is currently investigating the broader network of technical experts and facilitators who helped launder the proceeds of the crime.
ED Investigation and Asset Attachments
Parallel to the CBI's criminal probe, the Enforcement Directorate (ED) is investigating the money laundering aspects of the case. The ED has already attached several properties in India and abroad, including six offices in Dubai. 79 crore belonging to businessman Raj Kundra, which included a residential flat in Juhu, Mumbai, and a bungalow in Pune. Officials have noted that the accused used various digital currencies, including Bitcoin, Ethereum, and USDT, to facilitate hawala transactions and move funds across international borders.