“I was present at the cremation centre along with three other lawyers,” said Deepak Prakash, a Supreme Court lawyer who is representing Amit Bhardwaj and 18 other accused in the GainBitcoin Ponzi scheme worth more than $2.7 Bn.
Bhardwaj, a key accused of the case, died of cardiac arrest on January 15, 2022, and Inc42 was the first to break the news.
According to Prakash, the deceased contracted Covid-19 on January 5 but was recovering fast. However, on January 14, there was a sudden spike in his blood sugar, and he was admitted to Fortis Hospital, Vasant Kunj, Delhi. A day later, he was declared dead due to cardiac arrest.
Bhardwaj’s death is likely to hurt the long-pending and complex lawsuit even more. And the most critical question is: What happens now to the investigation being done by ED and Various Police teams who are still investigating the issue and to the case at the Supreme Court and other courts?
Can the investigators solve the case and attach the cold wallets allegedly containing most of the bitcoins that Bhardwaj mined and gained from others? (Unlike hot wallets, which are used for daily transactions, cold wallets are used to store cryptocurrencies.) So far, these cold wallets could not be traced, and these were not mentioned in probe reports.
- Will the investors get their money back after an investigation laced with corruption and full of loopholes?
- Why did the police fail to find foolproof evidence even after several arrests?
We will explore all these angles and more in this story. But before we take a close look at the investigation and its findings, we need to understand the nature of the empire that Amit Bhardwaj built and how a scam, initially pegged at $300 Mn, ballooned into a $2.7 Bn Ponzi scheme.
How The Amit Bhardwaj’s Network Was Spun And Spread
GainBitcoin is considered one of the biggest Ponzi schemes globally, with more than 8,000 investors losing their money. But according to people close to Amit Bhardwaj, what the Enforcement Directorate (ED) and the special investigation team of Pune Police have unearthed is the tip of the iceberg.
Although Amit was in the spotlight most of the time, the entire operation was run by the three brothers, Amit, Ajay and Vivek, their father Mahendra Kumar and a few other partners. According to the scam victims, Ajay, an IT professional, used to take care of the wallets and the overall operations for the past couple of years and must be interrogated thoroughly.
View detailed timeline here.
But first things first. Amit had set up more than 40 companies worldwide to carry out his ‘illegal’ activities under the garb of crypto investments. These companies were operated by his near and dear ones, father and brothers, for instance, said a close associate of Amit Bhardwaj.
As for the people at the top who used to take care of the entire business and played a crucial role in running the GainBitcoin Ponzi scheme, Amit had coined the term ‘seven stars’. The Pune Police said that these ‘top seven’ included all four of the Bhardwaj family as well as Ashish Dabas, Manu Sharma and Rupesh Singh.
That does not limit his long list of ‘accomplices’. As per the chargesheet of Pune Police, Sahil Baghla, Nikunj Jain and Ayush Varshney, cofounders of Gurugram-based Darwin Labs, helped develop the MCAP tokens (used as ICO tokens) for Amit’s company, besides the CoinBank bitcoin wallet and the GB21 portal. This could explain how the trio managed to raise series A funding from Amit despite their lack of expertise in the crypto space.
Incidentally, both Baghla and Jain are serial entrepreneurs and earlier set up Bluegape and Frankly.me, respectively.
According to the latest development, the ED has added Darwin Labs cofounders to the list of accused and is expected to summon them.
Similarly, there was Akash Kantilal Sancheti, another aide of Amit with little experience in crypto. He used to run a company called Cloud Miners on behalf of Amit Bhardwaj and sometimes asked investors to transfer their money into his mother’s account instead of the company’s account.
Among the top agents of the multi-level marketing (MLM) scheme were Hemant Chandrakant Bhope, Pankaj Adlakha and Aditi Bhardwaj, besides Dabas, Sharma and Singh from the ‘Seven Star’ group. These operators used to run the whole show on the ground, while Amit Bhardwaj monitored and controlled the entire Ponzi scheme.
In its report, the ED alleged that more than 82,132 bitcoins were collected by Sharma, while Aditi Bhardwaj collected about 7,000 bitcoins from her downlinks. Although it is not clear how many bitcoins were collected from Bhope’s downlinks, the probe agency said that Bhope had earned more than 520 bitcoins in commission.
Until now, the ED has not been able to trace the entire MLM chain, and it is not known how many bitcoins were collected from every node of the chain.
Amit had also set up companies in the Cayman Islands, Hong Kong, Dubai, the US, Estonia and many other parts of the world that helped him evade taxes. “Plus, it helped him convert black and grey money into white,” said Vipin Kohli, who had invested around INR 5 Cr in Bhardwaj’s GainBitcoin scheme.
Among the companies set up/run by Amit Bhardwaj in India were NexGen Facility Management, Norton Sales, Grand Wedding Solutions, Sabtechs Services India and Hans Clouding LLP. But barring Hans Clouding and Norton Sales, other companies are now defunct.
“At the peak of things, Amit used to operate across 90 countries,” said one of his associates mentioned above. He also invested in other sectors and companies, including Airbitz, Darwin Labs, AlphaPoint, AirSelfie, RockMiner and 1hash.
Inside GainBitcoin And Its Multiple Operations
A look at the chargesheet filed by the Pune Police also reveals that Amit and his brother Vivek had set up Variabletech in Singapore in 2014. This firm launched a crypto exchange called BitEx and later came out with the GainBitcoin MLM scheme that offered bitcoin mining contracts. Under these contracts, people were promised a 10% monthly return on every investment for 18 months, and the payout would be done in bitcoin.
Meanwhile, Amit had also published a book called Cryptocurrency For Beginners and used to call himself a crypto guru and visionary. Celebrities like Shilpa Shetty, Huma Qureshi, Neha Dhupia and others tweeted about him and his book, which helped create an aura of authenticity.
Soon enough, the business had its first taste of trouble. As the MLM scheme started flourishing, it became increasingly difficult to pay every investor the promised 10% returns in bitcoin. And people began complaining on social media and other platforms.
Finally, an investor called Zakhil Suresh filed a petition on Change.org to draw the attention of the Delhi Police Commissioner to Bhardwaj and his company. The petition was supported by 1,000+ people before it was closed.
One is not exactly surprised by so few complaints in the public domain. Amit used to lock investors’ accounts if they voiced their grievances in public, and many decided to keep quiet as their money was at stake.
This is uncannily similar to what Inc42 has recently unearthed by delving deep into the crypto Ponzi schemes on messenger apps like WhatsApp and Telegram.
But the worst was yet to come. In April 2017, the terms and conditions of GainBitcoin contracts were changed arbitrarily without informing the investors. A new crypto mining contract was uploaded, removing any mention of bitcoin in the latest document.
A bitcoin growth fund was set up in the same year, apparently by Phil McCauley, Nagaraj Konda and Mattias Frost, and raised $14.5 Mn via MCAP token sales on the ICO. It was later revealed that these people were simply advisors or board members while Amit Bhardwaj called the shots.
He told the investors that they would get 465 MCAP tokens for every bitcoin investment. But the major issue was that MCAP was listed on only two exchanges: Amit Bhardwaj-owned MCAP Exchange and another one called C-CEX. At the MCAP exchange, the price of each MCAP token was $15, but on C-CEX, it was just $1.4.
That was a huge price gap, and when people tried to convert their MCAP tokens on MCAP exchange, they could not do it. The orders were shown as pending. If requested to convert into bitcoin, it said: Bitcoin is currently not available.
Amid rising police complaints and criticism on social media, the entire Bhardwaj family shifted to Dubai by Q3 2017.
Asked how he ran such an extensive fraud, a Pune police officer, who had contributed a lot in filing the chargesheet, told Inc42, “His modus operandi was simple. Create a short-time product to scam people. By the time people get to know it’s a fraud, shut it down and create many more to divert attention.”
But these theatrical tactics could not last long.
What Went Wrong With The Investigation
“He told me 150 thano me INR 150 Cr baant dunga… ek bhi FIR nahi hogi meri… Now I have helped file 33 FIRs. Sorry 150 is not done yet.” — P.S. Sahoo, investor
[Bhardwaj told me he would disburse more than INR 150 Cr across 150 police stations where the complaints would be filed and would not let them register a single FIR. Till Now I have helped file 33 FIRs. Sorry 150 is not done yet.” — P.S. Sahoo, investor]
Eventually, Bhardwaj was arrested in Bangkok in March 2018. His other associates, including Akash Sancheti, Vyas Narhari, Darwin Labs cofounders Nikunj Jain and Sahil Baghla and many others, were also rounded up by the local police across the country. But by the end of 2019, everyone was granted bail.
Prakash, who is representing as many as 18 accused in the case, confirmed that all his clients were granted bail by the Supreme Court, while others got bail from Bombay High Court, Chandigarh High Court and other law courts.
Sahoo, Kohli, Vikas Aditya and other complainants said that the investigation was botched up from the beginning. The Pune Police did the only major investigation at an early stage, but there was no further development after that. Worse still, lead IOs were changed five-six times both in Pune and Delhi.
“The police lack adequate expertise in such cases, but they have not hired crypto analysis companies like Chainalysis who can help them decode the transactions,” said Sahoo. Other victims alleged that some of the police officials have lost interest and are intentionally not taking up the case.
“Amit Bhardwaj had threatened to kill me. So, I complained to the police and demanded police protection. But they provided security to Bhardwaj instead of helping me,” said Kohli.
With Amit Bhardwaj’s Death, Where Is The Investigation Headed?
Asked what would happen now, Amiye Dange, who represents 85 fraud victims from Maharashtra and three from Delhi, said, “The contracts were signed between the company and investors. Although Amit Bhardwaj is no more, his brothers Vivek and Ajay and father Mahendra are very much there. So, I don’t think there will be any major impact either on the investigation or on the legal proceedings.”
In fact, there are interesting precedents in such cases. For instance, the Supreme Court indicted former Tamil Nadu chief minister J. Jayalalithaa posthumously in a disproportionate assets case.
“This case will also proceed, but Bhardwaj will not be there to serve the sentence even if he is convicted. That’s the difference now,” said another lawyer representing Amit Bhardwaj.
Although the legal proceedings may continue in the Supreme Court, the MPID Court (Mumbai), the District Court in Pune and other such legal establishments, a major issue can hinder investigators after Amit Bhardwaj’s death. Many fear that the rest of the accused will now try to shift the entire blame onto the deceased.
According to Inc42 sources, Vivek Bhardwaj and his mother Bimla Devi had appeared before the ED, Mumbai, and put most of the blame on Amit. When ED showed Vivek his email trails, the latter said his brother operated those email IDs.
Vivek has trained as a dentist, while Ajay is an IT professional, and many fraud victims allege that he is the real kingpin.
“(Amit) Bhardwaj was extremely unwell for quite some time. At times, he was kept on dialysis. So, the members of his family were called and told how they should operate in case of his death,” said one of his close associates.
“Since then, Ajay Bhardwaj has been running the entire operation, but he stays in the background. And Amit always tried to keep his brothers away from the spotlight,” said Kohli.
This is why the police could not track and attach all their properties, especially the crypto assets.
Amit Bhardwaj is gone but not his properties. The crypto fraud victims still hope to recover their money when the case concludes and justice is served.
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