ED Arrests Another Suspect in India’s Largest Crypto Scam

The Enforcement Directorate (ED) has arrested Simpy Bhardwaj aka Simpy Gaur, the wife of Ajay Bhardwaj, one of the main accused in the GainBitcoin Ponzi scheme. The scam is estimated to be worth over $2.4 billion and has duped more than 8,000 investors across the country.

The Multi-Agency Investigation Continues

The ED initiated the investigation under the Prevention of Money Laundering Act (PMLA), 2002, based on multiple FIRs registered by Maharashtra Police and Delhi Police against Variable Tech Pte Ltd, Late Amit Bhardwaj and his friends and family members and other MLM agents. It has been alleged that they had collected huge amounts of funds in the form of Bitcoins, somewhere around worth 20,000 crore INR ($2.4 billion) from victims with the false promises of 10% per month return in the form of Bitcoins.

The mastermind of the scam, Amit Bhardwaj, passed away in police custody in 2022, leaving the investigation open-ended and the victims hopeless. However, the recent arrest of his brother’s wife could give the investigation a new life. Sources close to the matter revealed that Simpy was handling crypto wallets that held illicitly gained bitcoins from the victims and helped her husband and father-in-law to abscond.

Last week, the Supreme Court, responding to a petition filed by Ajay Bhardwaj, issued a directive for a CBI investigation into the case. Simultaneously, the court instructed the ED to persist with its ongoing inquiry under the PMLA. The ED has also sought assistance from foreign countries in the probe.

The Modus Operandi of the Scam

The GainBitcoin scam was one of the largest and most sophisticated crypto frauds in India. The scammers lured investors with attractive returns on their investments in Bitcoin, which was then a relatively new and unregulated asset class. The scammers also used celebrities and social media influencers to endorse their scheme and create a false sense of legitimacy.

The scammers operated through a network of companies and websites, such as GainBitcoin, GBMiners, MCAP, and Bitcoin Growth Fund. They also created a cryptocurrency called MCAP, which they claimed was backed by mining and ICO investments. They offered investors the option to convert their Bitcoins into MCAP tokens, which they claimed would appreciate in value and generate higher returns. However, the MCAP tokens were worthless and had no market value.

The scammers also used a complex web of transactions and wallets to hide the trail of money and evade the authorities. They transferred the Bitcoins collected from the investors to various offshore accounts and exchanges. They also used multiple layers of encryption and anonymization to conceal their identities and locations.

The Impact of the Scam on the Crypto Industry

The GainBitcoin scam has not only affected the thousands of investors who lost their hard-earned money, but also the entire crypto industry in India. The scam has tarnished the reputation of Bitcoin and other cryptocurrencies, and has created a negative perception among the public and the regulators.

The scam has also prompted the government to take a cautious and restrictive approach towards the crypto sector. The government has proposed a bill that seeks to ban all private cryptocurrencies in India and create a digital rupee as the official digital currency. The bill also proposes to impose severe penalties on anyone who mines, holds, trades, or issues cryptocurrencies in India.

The crypto industry and the stakeholders have opposed the bill and have urged the government to adopt a more progressive and consultative approach. They have argued that banning cryptocurrencies would stifle innovation and growth, and would deprive the country of the benefits of the emerging technology. They have also highlighted the difference between regulated and legitimate crypto activities and unregulated and fraudulent ones, such as the GainBitcoin scam.