India’s CBI Raids 60 Locations in Crackdown on GainBitcoin Scam

India’s Central Bureau of Investigation (CBI) has conducted raids at 60 locations across the country, including in 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, which operated under Variabletech Pte. Ltd., promised investors lucrative returns of 10% monthly in Bitcoin (BTC) through “cloud mining contracts.”

“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,” the agency said in a Tuesday statement.

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

Speaking to Decrypt, Sudhakar Lakshmanaraja, founder of the blockchain education platform Digital South Trust, remarked on the urgent need for stronger regulations and investor protection in India’s crypto industry.

“Despite regulatory scrutiny, MLM-based scams continue to thrive by exploiting loopholes and public ignorance,” Lakshmanaraja added.

The GainBitcoin scam’s fraudulent operation 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 the sales made by their recruits.

Initially, investors were paid in Bitcoin, but as the scheme collapsed in 2017, GainBitcoin switched to an in-house crypto called MCAP, which had much less value.

This move left many investors holding worthless digital currency instead of the promised Bitcoin.

The investigation took a major turn in March 2022 when the Indian Supreme Court intervened in the case, ordering Ajay Bhardwaj to disclose the details of his deceased brother’s crypto wallet.

The court ruling, which followed Ajay Bhardwaj’s appeal to have the case dismissed, said that the username and password were crucial to understanding the scale of the fraud and tracing the proceeds.

The CBI has now consolidated multiple FIRs registered in various states, including Jammu & Kashmir, Punjab, Delhi, West Bengal, Karnataka, and Maharashtra, into one single 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, the managing director of Coin ZX, an Indian crypto trading platform, for allegedly defrauding investors out of $23 million (Rs 200 crore).

The police action follows a series of complaints lodged against Coin ZX, which allegedly promised returns on Bitcoin investments, only for investors to see payments stop after a few months.

The Indian Enforcement Directorate (ED) has also launched a crackdown on crypto fraud, conducting searches in Delhi, Jaipur, and Mumbai as part of an investigation into an alleged scam involving $72 million (₹600 crore) in illegal crypto conversions.

The operation is linked to Chirag Tomar, an Indian national currently serving a prison sentence in the U.S. for defrauding investors of over $20 million.

Tomar’s scheme involved spoofing the website of crypto exchange Coinbase, stealing user credentials, and transferring the stolen funds to wallets under his control.

“This probe reflects the government’s commitment to tackling crypto fraud, demonstrating accountability and investor protection,” Vedang Vatsa, Founder of global crypto community Hashtag Web3, told Decrypt. Vatsa added that the probe, “highlights the need for balanced regulations to ensure a secure environment and promote innovation in India’s digital asset ecosystem.”

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