ED begins crypto crackdown, books businessman over Rs 2000 cr bitcoin Ponzi scheme

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The Enforcement Directorate on Thursday registered an enforcement case investigation report (ECIR) against Amit Bharadwaj, a bitcoin entrepreneur who duped thousands of Indians.

The ED’s decision came on the same day as the Reserve Bank of India’s decision to ban regulated entities from dealing in virtual currencies. This is the first ECIR registered by the ED for violations involving virtual currencies.

The case was filed hours after Bharadwaj was arrested by Pune Police at Delhi Airport. A complaint had been registered against Bharadwaj in the cybercrime cell of Pune Police by Bhimsen Agarwal.

Consequently, the cybercrime cell filed an FIR (first information report) against Amit Bhardwaj, Ajay Bhardwaj, Rupesh Singh, Hemant Chauhan, Hemant Suryavanshi, Kaka Ravde, and others, under Sections 406, 420 and 34 of the Indian Penal Code.

A similar FIR was registered against Amit Bharadwaj by the cybercrime cell in Pune in January this year, too.

“Thousands of people were duped in the name of cryptocurrencies and only in Maharashtra, the number is more than 8000 people,” a source told Moneycontrol.

The case against Bharadwaj is only one of 27 such cases of fraud involving cryptocurrencies that the Pune cybercrime cell is investigating at the moment. Pune Police have already arrested eight people on charges of cheating, in connection with these cases.

Also, the crackdown on virtual currencies is not just confined to Pune. Last month, Delhi Police also registered an FIR against Amit Bhardwaj. An investor who invested in Bharadwaj’s scheme told Moneycontrol, “Amit Bhardwaj duped people, not only in India, but in the US too, and even from there, he is absconding”.

An FIR registered in Delhi clearly mentions that Amit Bhardawaj’s company duped hundreds of investors in a Ponzi scheme. The FIR stated that through this Ponzi scheme, Bharadwaj convinced people to invest in Gatbitcoin.com, which is owned by Variable Trade Pvt Ltd, a company registered in Singapore.

According to the report, Gatbitcoin promised to give an assured return of 10 percent every month to all its investors. In order to attract investors, it claimed to be an authorized Bitcoin miner, and that world-renowned miner Amaze Mining holds a 5 percent stake in it.

A source close to the development told Moneycontrol that all cases against anyone dealing in virtual currencies like Bitcoin, including the one against Bharadwaj, will now be clubbed into one and investigated by the ED. Despite being arrested by Pune Police already, Bharadwaj may also be arrested by the ED as it has now filed a case of its own against him.

On Thursday, in its monetary policy statement, the RBI stated that virtual currencies raise concerns of consumer protection, market integrity and money laundering. The Mahrashtra government also mentioned in the state assembly that the ED will probe the case involving thousands of investors getting duped to the tune of Rs 2,000 crores.

The victims of Bharadwaj’s con hailed primarily from Mumbai, Pune, Nanded and Kolhapur.

Despite Bitcoin and other altcoins getting a warm welcome in India after their initial success abroad, the ED and Income Tax Department are now looking at individuals who invested in these speculative instruments.