New Delhi, Mar 11: The CBI has arrested Darwin Labs co-founder Ayush Varshney, one of the main accused in the Rs 20,000 crore Gain Bitcoin currency scam case, officials said on Wednesday.
The agency had issued a Look Out Circular against Varshney. His attempt to flee the country on Monday triggered an alert, leading to his detention at the Mumbai airport, they said. Varshney was formally arrested on Tuesday.
According to the CBI, Darwin Labs designed and developed the digital infrastructure which formed the operational backbone of the alleged fraudulent enterprise Gain Bitcoin.
During the investigation, the agency detected the alleged involvement of Darwin Labs Private Limited and its co-founders — Varshney, Sahil Baghla and Nikunj Jain, the chief capital officer and founder at Vaomi AI — in the design, development and deployment of a cryptocurrency token known as MCAP and its associated ERC-20 smart contract.
In a statement, it said that Darwin Labs allegedly played a central role in building the technological architecture underpinning the cryptocurrency ponzi scam perpetrated through a web of platforms, including the flagship site www.gainbitcoin.com.
It was allegedly masterminded by Amit Bhardwaj (now deceased) and his brother Ajay Bhardwaj, the officials said.
The company developed several key components, including the Bitcoin mining pool platform GBMiners.com, a Bitcoin payment gateway, the Coin Bank Bitcoin wallet and the Gain Bitcoin website used to interface with investors.
Launched in 2015, the Gain Bitcoin operation was camouflaged under the facade of Variabletech Pte. Ltd, officials said.
The scheme lured the investors offering extraordinary returns of 10 per cent per month in Bitcoin over an 18-month period, urging them to purchase the digital currency from external exchanges and deposit it with GainBitcoin through “cloud mining” contracts.
“The funds collected from investors were subsequently misappropriated. The case is being investigated under Sections 120B, 406 and 420 of the Indian Penal Code (IPC) and Section 66 of the Information Technology Act, 2000,” a CBI spokesperson said in a statement.
“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. However, as the influx of new capital dwindled by 2017, the charade began to crumble.
“In an attempt to cover up the losses, GainBitcoin unilaterally switched payouts to their alleged in-house cryptocurrency called MCAP, which had significantly less value than Bitcoin, further misleading investors,” the CBI had said in a statement after the registration of the case.
The sheer scale and complexity of the scam resulted in the registration of multiple FIRs, from Jammu and Kashmir to Maharashtra and from Delhi to West Bengal.
The Supreme Court had handed over the investigation into the case to the Central Bureau of Investigation (CBI), due to the expansive nature of the operation and the international ramifications it entailed.
The agency has launched a probe to unravel the full extent of the fraudulent activities, identify all implicated parties, and trace the misappropriated funds, including those that may have crossed borders.
