The Central Bureau of Investigation (CBI) has made the first arrest in what is believed to be one of India's biggest cryptocurrency scams, involving an alleged Rs 20,000 crore Bitcoin fraud.
Ayush Varshney, co-founder of Darwin Labs, was arrested while allegedly trying to flee to Colombo, Sri Lanka.
According to the agency, Varshney was detained at the airport based on a Look Out Circular issued against him.
Investigators say the case is linked to the GainBitcoin Scheme, launched in 2015 by Amit Bhardwaj, his brother Ajay Bhardwaj, and their associates.
The scheme allegedly promised investors 10 percent monthly returns, claiming profits would come from Bitcoin mining.
Investors were asked to purchase Bitcoin through cryptocurrency exchanges and invest it on the company's platform through cloud mining contracts.
According to investigators, the scheme operated on a multi-level marketing (MLM) model, where existing investors were offered incentives for bringing in new participants. This helped the scheme spread rapidly across the country, drawing thousands of investors.
Initially, investors were paid returns in Bitcoin. However, after 2017, payouts reportedly began to slow down.
The company later started making payments in its own cryptocurrency called MCAP, which was valued far lower than Bitcoin. Agencies say this resulted in significant losses for investors and that the scheme effectively functioned as a Ponzi scheme.
During the investigation, the CBI conducted searches at over 60 locations across the country, including Delhi-NCR, Pune, Chandigarh, Nanded, Kolhapur, and Bengaluru.
Given the multiple FIRs registered across states, the Supreme Court of India in December 2023 transferred the investigation of all related cases to the CBI.
The Enforcement Directorate (ED) is also probing the case under money laundering laws. So far, the agency has attached several properties in India and abroad, including six offices in Dubai.
Investigators say cryptocurrencies such as Bitcoin, Ethereum, Tether (USDT), and Tron were allegedly used to carry out hawala transactions.
The main accused in the case, Ajay Bhardwaj and Mahendra Bhardwaj, are still on the run.
The ED has already attached assets worth about Rs 69 crore, and assistance from foreign authorities has been sought to trace proceeds of the crime.
In April 2024, the ED also attached properties worth around Rs 97.79 crore linked to businessman Raj Kundra in connection with the case. These included a flat in Juhu, Mumbai, a bungalow in Pune, and certain equity shares. The Juhu flat is reportedly registered in the name of his wife, actor Shilpa Shetty.
Investigating agencies say the case could be among India's largest cryptocurrency scams, with around 29,000 Bitcoins believed to be involved. Thousands of investors across the country were allegedly duped.
The CBI said the investigation is ongoing and more arrests are likely as it probes the network spread across India and abroad.
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