Nationwide operation targets key suspects in one of India’s largest cryptocurrency frauds, with significant implications for Tamil Nadu’s digital economy
CHENNAI, February 26, 2025 – The Central Bureau of Investigation (CBI) conducted coordinated searches at 60 locations across India on Tuesday as part of its probe into the Rs 6,600 crore GainBitcoin cryptocurrency scam, officials confirmed. The massive operation spans multiple cities including Delhi NCR, Pune, Chandigarh, Nanded, Kolhapur, and Bengaluru, targeting premises allegedly linked to key accused individuals.
The searches mark a significant escalation in the investigation of what has become one of India’s largest cryptocurrency fraud cases, with several investors from Tamil Nadu’s burgeoning startup ecosystem among those affected.
Elaborate Ponzi Scheme Disguised as Cloud Mining
The GainBitcoin scam, which began in 2015, was allegedly masterminded by Amit Bhardwaj (now deceased) and his brother Ajay Bhardwaj. Operating under the facade of Variabletech Pte. Ltd, the scheme lured investors with promises of extraordinary returns of 10 percent per month in Bitcoin over an 18-month period.
Investors were urged to purchase Bitcoin from external exchanges and deposit it with GainBitcoin through “cloud mining” contracts. The model followed a multi-level marketing (MLM) structure, commonly associated with pyramid-structured Ponzi schemes, where payouts were dependent on bringing in new investors.
“In its early days, investors received payouts in Bitcoin, fuelling the illusion of a lucrative venture,” explained a CBI spokesperson. “However, as the influx of new capital dwindled by 2017, the charade began to crumble.”
When the scheme started faltering, GainBitcoin operators attempted to cover up losses by unilaterally switching payouts to their alleged in-house cryptocurrency called MCAP, which had significantly less value than Bitcoin, further misleading investors.
Tamil Nadu Connection and Impact
Tamil Nadu, particularly Chennai and Coimbatore, has emerged as a significant hub for blockchain and cryptocurrency startups in recent years. Several entrepreneurs and investors from the state’s tech community were reportedly enticed by GainBitcoin’s promises.
“The cryptocurrency space in Tamil Nadu was just beginning to gain legitimate traction when this scam hit,” said Ramesh Kumar, founder of Chennai Blockchain Association. “Several promising startups in our ecosystem were indirectly affected as early-stage investors lost significant capital in this scheme, capital that could have been directed toward genuine innovation.”
Data from the Tamil Nadu Startup and Innovation Mission (TANSIM) indicates that approximately 8% of technology startups in the state were working on blockchain or cryptocurrency projects as of early 2024, with an estimated investment pool of Rs 450 crore dedicated to the sector.
Investigation Complexities and Current Progress
The scale and complexity of the scam resulted in multiple FIRs being filed across India, from Jammu and Kashmir to Maharashtra and from Delhi to West Bengal. Due to the expansive nature of the operation and its international ramifications, the Supreme Court handed over the investigation to the CBI.
“CBI took over these cases and is conducting an omnibus and comprehensive investigation to uncover the full extent of the fraud, identify all accused parties, and trace the misappropriated funds, including international transactions,” the agency stated.
During Tuesday’s searches, investigators seized several crypto wallets, incriminating digital evidence, and various digital devices. Evidence present in emails and cloud storage has also been confiscated, potentially providing crucial leads in tracking the flow of funds.
Regulatory Implications
The case has significant implications for cryptocurrency regulation in India, which remains a contentious issue. The GainBitcoin scam has been cited by regulators as an example of the risks posed by unregulated cryptocurrency ventures.
“This case demonstrates why we need robust but balanced regulations,” said Dr. Sunita Rao, a financial technology expert at IIT Madras. “Tamil Nadu’s digital economy is increasingly reliant on blockchain technologies, but incidents like the GainBitcoin scam threaten to undermine legitimate innovation and investment in this space.”
Industry insiders suggest that the Tamil Nadu government has been considering state-level guidelines for cryptocurrency and blockchain startups, with discussions accelerating following several high-profile fraud cases.
Learning from the Fallout
The GainBitcoin case serves as a cautionary tale for Tamil Nadu’s growing number of crypto enthusiasts and blockchain entrepreneurs. Several industry groups have since launched awareness campaigns to help investors identify potential cryptocurrency scams.
“Education is crucial here,” said Vijay Prakashan, CEO of Fintech Founders Tamil Nadu, a Chennai-based industry association. “We’ve launched initiatives to help potential investors understand red flags like promises of guaranteed returns and MLM structures in crypto projects. The ecosystem needs to self-regulate while we wait for comprehensive government frameworks.”
Conclusion
As the CBI continues its investigation, the GainBitcoin case highlights both the vulnerabilities and the need for maturity in India’s cryptocurrency landscape. For Tamil Nadu’s startup ecosystem, which has positioned itself as a forward-thinking hub for digital innovation, the fallout presents both challenges and opportunities to establish more transparent and secure practices.
The scale of the CBI operation underscores the government’s commitment to addressing cryptocurrency fraud, potentially clearing the way for legitimate blockchain ventures to flourish in the future
