Cryptocurrency India’s biggest scam is continuing to unravel to the public as a murkier network of scammers stealing people money nonstop for cryptocurrency investment on a market that promising a huge return on profit.

On June 05, British businessperson Raj Kundra the husband of Bollywood actor Shilpa Shetty was questioned by India’s enforcement directorate (ED). He was allegedly involved in a scam that saw Amit Bhardwaj, founder of bitcoin firm GainBitcoin, reportedly duping investors of around Rs2,000 crore ($300 million).

What is the scam?

It is essentially a Ponzi scheme that affected over 8,000 Cryptocurrency bitcoin investors in India. Kingpin Bhardwaj is a software developer and former Infosys employee who jumped on to the cryptocurrency bandwagon.

He owns and runs multiple cryptocurrency operations, but his most popular venture, GainBitcoin, is what is in the eye of the storm. Founded in 2013, GainBitcoin—now apparently shut—operated a multi-level marketing scheme in which Cryptocurrency bitcoin investors were promised massive returns on investments, besides bonuses for bringing in other Cryptocurrency investors. At one point, Bhardwaj had around 100,000 Cryptocurrency investors on the network and managed to set up himself as an expert in the field by writing books on cryptocurrencies and procuring celebrity endorsements, including by Shetty herself.

Bhardwaj also launched his own first Cryptocurrency coin offering (ICO), similar to a first public offering at the stock market, with a bitcoin-like product named MCAP in 2017.

Soon, however, complaints began pouring in from Cryptocurrency investors who weren’t receiving the promised returns. Unable to contact the company and withdrawing their Cryptocurrency investments, a few of them launched an online Change.org campaign against Bhardwaj and his firm in April 2017.

Bhardwaj, though, left India for Dubai and later for Bangkok. He was arrested in New Delhi in April this year. Investigations into Bhardwaj’s transactions and the Cryptocurrency scam are now on.

What does Raj Kundra have to do with this?

Kundra’s name popped up after the ED reportedly found links between Bhardwaj and the Match Indian Poker League, a franchise-based poker tournament promoted by the businessman’s company, Viaan Industries.

The Briton has denied allegations of helping Bhardwaj launder money issue from the Cryptocurrency scam. In a statement to The Times of India newspaper, he said:

This is to clarify that I have no involvement or connection in the bitcoin scam whatsoever. I was summoned by the ED merely as a witness. An inquiry is underway and I am cooperating with the law enforcement agency as Bhardwaj is an acquaintance and protocol is being followed. Bharadwaj was to buy a team in the poker league and got into a contract with us. But due to non-payment, his contract was terminated. I have come as a witness to the same.

This isn’t the first time he’s been found in murky waters. In 2013, Kundra, who owned the Indian Premier League cricket team, Rajasthan Royals, was caught in a betting scandal and barred from any cricket-related activities for life.

Tip of the iceberg

These developments come at a time when the number of cryptocurrency scams in the country is on the rise.

Initially, they were carried out at a smaller scale, involving criminals hacking into peoples’ accounts or conducting fraudulent transactions. In April, for instance, nine police officers in the western Indian state of Gujarat were arrested for kidnapping a business person and extorting from him for a value of 200 bitcoins.

But Bhardwaj’s alleged shenanigans have taken matters to another level. And that too when India’s cryptocurrency ecosystem has come under increasing scrutiny. The Narendra Modi government and the country’s top court are yet to take the last call on the legality of cryptocurrencies in India, even as the Reserve Bank of India has made its displeasure with these virtual monies known repeatedly.

The uncovering of the massive scam now will do the industry no favors.

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