New investigations are cropping up regarding the $300 million worth Bitcoin-based scam hatched by GainBitcoin’s founder Amit Bhardwaj. The latest ones are engulfing notable personalities such as Sahil Baghla and Nikunj Jain.
Baghla and Jain, serial entrepreneurs and co-founders of the Gurugram-based Darwin Labs, were arrested on the grounds of having key connections with Bhardwaj and his company.
The duo was allegedly a part of the conspiracy and working as partners with Bhardwaj. As per the report by Cyber wing of Pune Police, the duo built the portal – GBMiner, a BTC payment gateway, and mining pool. These entities were used by Bhardwaj in the scam.
At the time of arrest, police also seized 43.225 Bitcoins, 79.949 Ethereum, Rs 33 lakh in cash, a laptop and some mobile handsets, as has been reported by Pune Mirror.
Jain is an entrepreneur and active angel investor with a portfolio of over half a dozen companies. He is also the co-founder of startups such as Frankly.Me, InnoxApps and Darwin Labs.
Baghla is an IIT alumnus and previously founded a fan merchandising online store Bluegape. Currently, he is the founder of Murmur.
About the scamster, Bhardwaj
Amit Bhardwaj played a big role in introducing Bitcoin to the Indian investors, traders and users. He educated, explained and made them think about the possible power of Bitcoin.
A computer science engineer from MGM College of Engineering, Nanded, Amit Bhardwaj worked for the Infosys for three years and later one year for Hyderabad-based Reasoning Global before moving on an entrepreneurial journey.
In March 2016, Amit set an Umbrella company called Amaze Miners and Blockchain Research Ltd in Hong Kong under which he established GB Miners, Amaze Miners, GainBitcoin, and CoinBank.
The money was taken in Bitcoin and promised to return 10% in Bitcoin. This was not just an inflated idea but actually a fraud idea. No one can return more Bitcoins than they actually collect. Therein, lies the problem of the scheme proposed by Bhardwaj.
Arrest of Bhardwaj
Earlier this month, Bhardwaj was held in Bangkok and brought back to Pune for trial in $300 million worth Bitcoin-based Ponzi scheme. Bhardwaj spelled out the names of Darwin Lab owners, Ayush Warshne, Jain, and Baghla during the investigation. He claimed they were his partners in the ventures — Bitcoin, Emcab and Coin Bank.
Following the leads that Bhardwaj gave, sleuths procured email exchanges between the promoters of Darwin Labs and Bhardwaj for the appointment of lawyer and CA for routing money overseas to evade tax.
The email exchanges between the prime accused and Darwin Labs co-founders clearly prove that they were planning to transfer money made in the scam to a particular country where they can have access to it.
The report also adds that Bhardwaj and Darwin Lab were involved with another partner, who is a part of the conspiracy.
Bhardwaj’s’ (Amit and Vivek Bhardwaj) lawyers have opposed their police custody under the Maharashtra Protection of Interest of Depositors (MPID) Act, Chit Fund Act and Protection of Depositors Act.
The defense, has, however, emphasised that such acts aren’t applicable to them because Bitcoin is a cryptocurrency, while these laws technically apply only to Indian currency.
The company’s blockchain-focused accelerator – Satoshi Labs had secured Series A round by Bhardwaj and GBMiners.
However, Baghla had clarified that his company denounced the funding as the co-founders realized that accepting Bhardwaj funding is not in the best interest of the accelerator.
Other cases
In a separate case, the Delhi Police had arrested Bitmineplus founders for allegedly duping 5,000 people through a Bitcoin-based scam. Interestingly, the duo from Sonipat had claimed to have drawn inspiration from Bhardwaj’s firm GainBitcoin.
In yet another case, CoinSecure, an Indian cryptocurrency exchange, said nearly Rs 20 crore were stolen from its bitcoin wallet, according to media reports.
The Reserve Bank of India has already barred banks from facilitating trade on virtual currencies and mandating them to unwind their existing relationship with exchanges within three months.
But experts feel that pushing the exchange business out from the formal economy to the informal cash economy to operate under the radar will only worsen the problem.
Asia, Vietnam and South Korea have also suffered millions of dollars worth of fraud and embezzlement in some of the cryptocurrency businesses. Earlier this year, one of Japan’s cryptocurrency exchanges was hit by a daring $530 million theft of digital money.
Also Read: Your bank will not allow you to buy bitcoins anymore
