In this news:
In a bold crackdown over the past week, investigation into India’s cryptocurrency networks has gained significant momentum as both the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) intensify their probes with multiple raids and instances of assets-freezing.
This dual-pronged approach by both central agencies marks a turning point in the government’s decision to finally come down heavily on the unregulated nature and opaque dealings of cryptocurrencies.
With the ED tightening its grip and freezing crypto assets, the CBI has now unleashed a sweeping crackdown, raiding nearly 60 locations across states in India’s spiralling crypto fraud nexus. According to central agencies, these scams are not just about financial fraud—they’re fuelling money laundering, terror financing, and tax evasion on an unprecedented scale.
The Crypto Case By CBI
In a statement on Tuesday, the CBI said it conducted 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 statement.
It added, “GainBitcoin was an alleged Ponzi scheme launched in 2015 by Amit Bhardwaj (deceased), along with Ajay Bhardwaj and their network of agents. The scheme operated through multiple websites such as under the facade of a company named Variabletech Pvt. Ltd.”
The Modus Operandi
The fraudulent company allegedly lured investors through the said ponzi scheme, promising lucrative returns of 10 per cent monthly in Bitcoin for 18 months. Investors were also convinced to purchase Bitcoin from exchanges and invest them with GainBitcoin through “cloud mining” contracts. The model followed a multi-level marketing (MLM) structure, commonly linked with pyramid-structured Ponzi schemes, where payouts were dependent on bringing in new investors.
The CBI statement further explained, “Initially, investors received payouts in Bitcoin. However, as the influx of new investments dwindled by 2017, the scheme began to collapse. In an attempt to cover up the losses, GainBitcoin unilaterally switched payouts to their alleged in-house cryptocurrency called MCAP, which had significantly less value than Bitcoin, further misleading investors.”
Multiple FIRs were registered across India, alleging large-scale fraud and money laundering. Following the cases registered in states/UTs, including Jammu & Kashmir, Punjab, Chandigarh, Delhi, West Bengal, Madhya Pradesh, Karnataka, and Maharashtra, the Supreme Court directed the CBI to initiate a nation-wide investigation. During the searches, a few crypto wallets, incriminating digital evidence and digital devices have been seized. The evidence in emails and clouds has also been seized.
ED’s Money Trail Tracing
In a different crypto case, the ED raided several premises in Jaipur, Delhi and Mumbai on August 20 for FEMA violation. The case was initiated in connection with the conversion of Crypto worth around Rs 600 crore at various Indian Crypto Exchanges and subsequent transfer of the funds to the beneficiaries.
“ED investigation revealed that the trusted websites were spoofed in such a way by search engine optimisation that when the website would be searched, the spoofed website would appear at the top. The spoofed website appeared exactly similar to the trusted website except the contact details. When the users would enter the login credentials, the spoofed website would show it wrong. Therefore, the users would contact the number given in the spoofed website which would eventually connect them to the designated call centre managed by Chirag Tomar,” said an ED statement. Tomar is the accused in the case.
“Once the fraudsters gained access to the victims’ accounts, they quickly transferred the victims’ cryptocurrency holdings to cryptocurrency wallets under their control. The stolen cryptocurrency would then be sold on website and converted to INR at Indian Crypto Exchanges. Subsequently, the money was transferred in the bank accounts of Chirag Tomar and his family members. The identified amount received by the Tomar family in the case so far through this scheme is Rs 15 crore. Several bank accounts pertaining to the Tomar family were frozen during the course of the search operation. The amount frozen so far stands at Rs 2.18 crore,” added the statement.
Rise Of Crypto Crisis
According to investigators, the surge in digital asset trading, fuelled by soaring investor interest and a booming start-up ecosystem, inadvertently opened the floodgates for unscrupulous operators. Recognising the scale and sophistication of these alleged scams, the ED and CBI have now turned their full attention to the crypto market.
Their efforts are focused on tracing illicit funds and uncovering fraudulent networks. Currently, the central agencies are meticulously mapping out networks of shell companies, offshore accounts, and almost fraudulent crypto exchanges, aiming to identify and dismantle the nexus of fraudsters.
