Money attracts thieves and masterminds of what could be the largest Bitcoin Ponzi scheme in history are facing justice. Vivek Bhardwaj, a software developer and brother of Gain Bitcoin founder and CEO Amit Bhardwaj, was brought to Delhi, India on Sept. 20 to face questioning and likely criminal prosecution. One estimate puts the stolen amount at $300 million USD that affected more than 2,000 victims, although the exact figure is unknown because Indian police have been unable to gather electronic records after the suspects destroyed at least three databases.
The brothers stole bitcoins (BTC) through Gain Bitcoin, a website that promised investors large profits in exchange for cryptocurrency-denominated deposits, mostly Bitcoin. One investor was promised 10% interest monthly — that his 240 bitcoins would supposedly yield 24 BTCs each month, per The Indian Express
report. The illicit scheme began to unravel after investors began complaining they could not withdraw their funds from the India-based firm.
To entice investors, the Bhardwaj brothers and their associates made outrageous claims that matched the frenzy during crypto-mania in late 2017: The company allegedly owned a gold mine in Africa and had taken a hundred investors on a luxury trip to Dubai. Agents were enlisted to the fraud after being wined and dined at five-star hotels in Dubai. They received 20% referral commissions.
"Amit Bhardwaj repeatedly claimed that he is capable of returning the amount of the investors but this is not the part of our investigation," according to police statement, per same report. "We have collected documents showing transactions of money from the side of investors in the companies of Amit Bhardwaj. In some cases, investors did not invest the money directly in Amit’s firms and the money was invested through a shell company, owned by a person named Sanchit, who has been arrested earlier and lodged in Burail jail. We have identified five more persons, including four residing in Delhi and one in Manali, Himachal Pradesh, who were assisting Amit Bhardwaj. These five will be arrested shortly."
India has been a hotbed for crypto scams with numerous arrests made over the past year. But pervasive fraud schemes have led to regulatory backlash in the second most-populous country in the world. The Indian government has been leaning towards antagonistic policies. Moreover, the nation's central bank recently argued before the Supreme Court that Bitcoin is not a legitimate payment system.
It's unknown exactly how many bitcoins and other cryptos were stolen as suspects covered their tracks by destroying databases and electronic records prior to their arrests. These actions show the need to train law enforcement everywhere how to investigate and convict cyber criminals who use sophisticated methods to steal new forms of money.
"We have failed to recover the database servers of three firms, Gain Bitcoin, GB Miner and GB 21," according to local police. "Pune police personnel, which earlier arrested Amit, Vivek and others in connection with a separate case registered with them, have reportedly damaged these servers in course of the investigation. At present, we collected documents, exchanged mails showing the investment in Bhardwaj’s firms. Most of the documents and screenshots of emails were provided by the complainants to us. The database servers of Amit’s three companies considered to be technical evidences showing the transactions of money from the side of investors in the companies belonging to Amit Bhardwaj."
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