CBI raids 60 locations across India in bitcoin and crypto fraud case

India's Central Bureau of Investigation (CBI) raided 60 locations across India on Tuesday, February 25, in connection with a bitcoin and crypto fraud case, according to the official press release.  

The investigation agency conducted searches in major cities, including Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur, and Bengaluru, among others, to identify individuals linked to the proceeds of the GainBitcoin scam. 

“Central Bureau of Investigation (CBI) is conducting extensive searches at over 60 locations across India as part of its investigation into the GainBitcoin cryptocurrency scam. The coordinated search operations are being carried out in major cities, including Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur, Bengaluru, and others, targeting premises linked to key accused individuals, their associates, and entities suspected of laundering the proceeds of crime,” said the official release.

GainBitcoin Scam

The GainBitcoin scam was an alleged Ponzi scheme launched by the late Amit Bhardwaj, along with Ajay Bhardwaj and a network of agents in 2015 under the company name Variabletech Pte. Ltd.

The fraudsters offered crypto investors 10 per cent returns in Bitcoin for 18 months. This persuaded the investors to buy Bitcoins from crypto exchanges and then invest with GainBitcoin though "cloud mining" contracts, as per the official release.

At first, people started receiving payouts in Bitcoins, and then in 2017, due to the rise in the investor base, the company started handing out in-house cryptocurrency called MCAP, which was of lesser value compared to Bitcoin, eventually misleading the investors.

“CBI took over these cases and conducting 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. During searches few crypto wallets, incriminating digital evidences and digital devices have been seized,” as per the release.

Frozen bank deposits

This move comes a day after news agency PTI reported citing the Enforcement Directorate (ED), that they have frozen bank deposits worth over ₹2 crore after searching across multiple states, on Monday, February 24.

These searches were conducted after an Indian citizen was accused of illegally converting cryptocurrency worth nearly ₹600 crore via several crypto exchanges, as per the report.

The searches were conducted on February 20 in Mumbai, Delhi, and Jaipur under the Foreign Exchange Management Act (FEMA).

“ED investigation was initiated on the basis of a newspaper report that an Indian national named Chirag Tomar was undergoing prison sentence in the USA for stealing more than USD 20 million from hundreds of victims through the use of fake or spoofed websites mimicking the cryptocurrency exchange website Coinbase,” said the Enforcement Directorate (ED) in the official statement cited in the agency report.

According to the news report, Tomar, who was sentenced to prison by a US court in November last year, could not be contacted for a response after ED made allegations about him in the recent development. 

As per the Enforcement Directorate's investigation, the trusted websites were “spoofed” in a way by SEO optimisation parameters that when users searched for the official website they are coming across the fake website, which appeared at the top, reported the news agency.

After the user tries to log in to the fake website, the website login credentials are flagged wrong, and the user is then mandated to give their phone number, which will connect people to a call centre run by Tomar, as per the report.

Once the scammers get access to the victim's accounts, they transfer their cryptocurrency balance to a wallet which is under their control. The stolen crypto coins will then be sold on the website localbitcoins, as per the report.