Amit Bhardwaj And The Massive GainBitcoin Scam: Is The Investigation Going Nowhere?

“They were promising huge returns.”

And as expected, it was too good to be true. The story is of GainBitcoin and one of India’s biggest Bitcoin scams seems to have stalled. With accusations against GainBitcoin founder Amit Bhardwaj and numerous middlemen such as Rupesh Kumar Singh, Akash Sancheti who convinced crypto enthusiasts and asset owners to join the doomed multi-level marketing scheme run by GainBitcoin and to earn high returns in Bitcoin.

It was March 2017 when Dhruv Shera was promised the huge returns quoted earlier. The Delhi/NCR resident had invested around 7 BTC (Bitcoin) in GainBitcoin, and Bhardwaj had promised monthly returns of 10% for 18 months.

But profits remained a distant dream for Shera and many others — with Bitcoin at its peak in December 2017 could have earned over INR 1Cr in returns with the 7 BTC he invested.

By the end of 2017, it was pretty clear that Shera and others like him were not likely to receive the returns as promised, and it dawned on him that he had invested in a Ponzi scheme. According to the investigation carried out by Pune Police, GainBitcoin had roped in around 8,000 investors who never got the promised “huge returns”.

After months of investigation, Bhardwaj was arrested by Delhi Police on March 30, 2018 and brought to Pune for questioning. In June 2018, Pune Police filed two separate chargesheets against Bhardwaj and eight other accused.

Bhardwaj, the key accused in the Bitcoin ponzi scheme allegedly worth anywhere from $300 Mn to a whopping $5 Bn, has been out on interim bail since the Supreme Court granted it on April 3.

The interim bail has not been granted in isolation; Bharadwaj was granted it on health grounds. The other accused — which include his two brothers and his father, Darwin Labs founders have also been granted bail by Indian courts on various grounds.

All this means, while the investigation carries on at its own pace, the more than 8K investors in GainBitcoin are left waiting to rue their losses as hopes of recuperating their crypto wealth fade away.

GainBitcoin’s Defrauded Investors Call For CBI Probe

“His property should be auctioned and the money should be disbursed among the investors,” Shera told Inc42. He said investors are planning to go to the Supreme Court against Bhardwaj’s bail decision, and are planning to hire a senior advocate in the Supreme Court.

The group has put forward a list of requests for the court:

1. Bhardwaj’s interim bail must be rejected
2. CBI Inquiry into the case
3. Supreme Court must direct to auction his property

Speaking to Inc42, another investor Vikas Aditya too confirmed the move. “We are raising money for this,” he said. It’s worth noting that since March 2017, over a dozen FIRs have been filed against him in various Police stations across India. His brothers Ajay Bhardwaj and Vivek Bhardwaj have also been named as accused in various frauds pertaining to the MLM schemes.

Earlier this year, Amit and Vivek filed two separate petitions requesting bail on health grounds and requesting the SC to club all cases citing the same ground.

According to Amit Bhardwaj’s lawyers, he suffers from kidney ailment and needs constant medical supervision. As a result, the Supreme Court, having granted bail on April 3, in a subsequent April 24 hearing, directed, “Considering his health condition, we direct exemption from personal appearance in all these Courts and fora till the next date of hearing.”

During the interim bail grant, the court had also directed Amit Bhardwaj to mark his presence before Shalimar Bagh Police Station every Monday. The SC had asked Amit Bhardwaj to deposit a personal bond of INR 1 Lakh and INR 10 Cr in the next six months. His brother Vivek Bhardwaj was asked to deposit INR 1 Cr within six months.

Where Is GainBitcoin’s Amit Bhardwaj?

Investors have accused the Bhardwaj brothers of absconding and not cooperating with the ongoing investigation.

Investors shared a newspaper clipping of a Patiala House Courts, New Delhi proclamation pertaining to Ajay Bhardwaj and three others who are allegedly on the run and were required to surrender themselves.

Is Amit Bhardwaj also absconding or running away from the ongoing investigations? His lawyer Deepak Prakash, who also represents some of the other accused in the case, rubbishes the claims. “We are fully complying with the court’s order.”

So, does Amit Bhardwaj mark his presence at Shalimar Bagh Police Station every Monday, as the Supreme Court had directed? Shalimar Bagh’s ACP Krishna Kumar Tyagi and SHO Rajendra Singh Gurjar confirmed to Inc42. “As per the court’s order, he does come to the police station every Monday and duly signs his presence.”

On Amit Bhardwaj cooperating with the investigation, Tyagi said, “Only the team doing investigation can speak on the issue, Shalimar Bagh police team are not doing any investigation but are simply following the court’s order.”

Advocate Ameya Dange is representing Pune-based Nisha Raisoni and 16 other investors, who were also victims of the GainBitcoin Ponzi scheme. Dange is expecting that the Pune District Court would soon frame the charges against Amit Bhardwaj and others.

Sambhaji Kadam, DCP of Pune Police told Inc42, “It was only Pune Police who has recovered Bitcoin from Amit Bhardwaj and Co. We have already filed the chargesheets. Now, it’s on the court to decide.”

Ameya Dange will also represent these investors at the Supreme Court. Speaking to Inc42, the advocate said, “The Supreme Court will now hear the matter on November 19, and we will present our arguments against his bail.”

On Amit Bhardwaj’s petition to club all the cases against him, Dange argued that this may not be possible. “Though the modus operandi of the Bhardwaj cases in various FIRs is the same, the other accused, as well as their victims in all these cases, are different.”

In the meanwhile, Amit Bhardwaj’s passport has been surrendered to the Registrar of the Supreme Court.

Darwin Lab Cofounders Granted Bail 

Founded in 2016, Gurugram-based crypto startup Darwin Lab is also accused of receiving a 20% cut from Bhardwaj’s venture. While Varshney was never arrested and was granted interim relief by the Bombay High Court, the court granted bail to Baghla and Jain in July this year. Baghla and Jain were arrested in April last year and had been in custody since then.

Darwin Lab offered technical support to the GainBitcoin website, according to the chargesheet filed by Dattawadi Police Station in Pune. Jain and Baghla helped Bhardwaj develop the coin bank, wallet, the GainBitcoin website and the MCAP cryptocurrency which were used for running the GainBitcoin operations that turned out to be a Ponzi scheme.

Arguing for Jain’s bail plea, advocate Subodh Desai told the Bombay HC that Jain had already resigned from the post of director of Darwin Lab on August 9, 2016.  He also pointed out the fact that Darwin Lab had not developed the main software but had only provided drivers for running the GainBitcoin software.

Granting bail, the Bombay High Court directed Jain and Baghla to file an affidavit before the MPID Court at Pune giving his No Objection for releasing INR 25 Lakhs from the amount of INR 80 Lakhs frozen by the investigating agency for distribution to the respective investors in the GainBitcoin scam.

Another accused Hemant Bhope was also granted bail on furnishing INR 15 Lakhs.

Is The GainBitcoin Scam Case Heading Nowhere? 

Out of the 8K investors in GainBitcoin, many of the victims Inc42 spoke to said they had borrowed from banks to invest through Bitcoin in Bhardwaj’s scheme. Paying the EMIs for these loans has taken a toll on their capacity to spend on the legal expenses.

Shera said the investors’ group is trying to collect INR 15 lakhs from across the country in order to appoint a senior counsel in the case who could represent them in front of the Supreme Court and help them get their money back.

However, the road ahead is definitely bumpy and there are no guarantees, even for victims of fraud.

In a case similar to the GainBitcoin scam, in January this year, Divyesh Darji — the key accused in the Regal Coin and Bitconnect scam allegedly worth between $5 Bn and $12 Bn — was granted interim bail by the Gujarat High Court for two weeks. The bail was given on a personal bond of a mere INR 10K. However, Darji has since then been on the run.

With such a precedent in the Indian legal system, the fears of the investor group are not misplaced or unfounded.

Complicating things further is the murky legal status of cryptocurrency and Bitcoin. While on the one hand, the current government’s inter-ministerial committee (IMC) has recommended a blanket ban on private cryptocurrency, the Supreme Court has urged the RBI to make its stance clear on the matter. The RBI had claimed that it had not consulted on the IMC recommendations, so there’s no clarity on this matter.

Whatever the outcome of the GainBitcoin and Amit Bhardwaj case, India’s crypto winter is set to go on. And there’s also no clarity on retrospective punitive action against cryptocurrency asset owners, who may have profited from the ventures, so the investor group which is now looking for justice could soon be in the dock itself.

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