India’s economic intelligence agency, ED (Enforcement Directorate) in a swift action, has moved to attach immovable properties and bank balance worth $6 Million in the country’s biggest Bitcoin fraud case involving $278 Million.
In what is perhaps India’s biggest Bitcoin fraud, thousands of innocent investors were duped to the tune of 80,000 Bitcoins. The case is being investigated by ED which is the agency responsible for enforcing economic and financial regulations and fight economic offenses in India.
The alleged mastermind behind the Ponzi scheme, Amit Bhardwaj, was arrested in April this year from Bangkok after multiple cases of fraud and cheating were registered against him in different parts of the country. The assets attached by ED include six offices in Dubai and apartments and bank balances of two of his accomplices, Hemant Bhope and Pankaj Adlakha
The Enticing Pyramid Scheme
Bhardwaj is alleged to have duped thousands of innocent investors in India by getting them to buy bitcoins and invest them in an 18-month plan which promised 10% monthly returns, to be paid out in bitcoins. The members could further increase their pay-outs by luring more investors into the scheme.
The company, Variabletech Pvt. Ltd., was registered in Singapore, and the MLM scheme was launched through a website named GainBitcoin in December 2015. Bhardwaj also operated multiple other companies – GbMiners, MCAP, and GB21 to name a few – to grow his illegal operations across the country.
Modus Operandi
Bhardwaj roped in a few agents and through them lured investors, promising high returns on their Bitcoin investments. To convince investors, Bhardwaj and his agents claimed that the company was running profitable Bitcoin mining operations under the banner of GbMiners and so could afford the high-interest pay-outs. For the first few months, the company did pay out the monthly interest, encouraging the investors to bring in more innocent victims. To influence the investors, Bhardwaj hired famous Bollywood film stars and actors to attend his events.
In May 2017, the company stopped paying out its customers in bitcoins and instead started paying them in a cryptocurrency called MCAP, which was launched by Amit Bhardwaj himself.
The ED reported that:
Bhardwaj offered them returns in his own newly launched crypto-currency token MCAP which had nearly no value on crypto-currency exchanges. There are large numbers of investors who got cheated in this way.
MCAP was listed in lesser known exchanges and carried negligible value in comparison to Bitcoin. Amid growing anger and police complaints from his customers, Bhardwaj and his main accomplices fled to Dubai in April 2017.
ED moves in
Cases were registered against Bhardwaj, his accomplices, and his shady firms across the country. Based on the FIRs (First Investigation Report) filed in Pune, Enforcement Directorate was asked to investigate the case. The agency is carrying out its probe under the provisions of the Prevention of Money Laundering Act, 2002.
A lookout notice was issued against him by the Indian law enforcement authority as Bhardwaj managed to evade the agencies for close to eight months. Late last year he managed to escape from Dubai to Bangkok before he could be nabbed at the airport. As investigations progress, the authorities suspect that the magnitude of the scam could be much higher (close to $1.1 billion) than initially estimated $278 million and may span across multiple countries.
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Images courtesy of IANS
