On Thursday of this week, two people were arrested in the Indian city of Thane in connection with a huge alleged Bitcoin scam. The pair – one of whom was named as Chetan Patil (27) by the Times of India – are thought to have been marketing a Bitcoin Ponzi scheme which defrauded investors out of funds worth up to 150 million US Dollars.
Speaking of the accused, a police source said;
“The duo were involved in marketing the scheme. They lured hundreds of people and then disappeared. We are investigating the case and also finding out how many more people they have duped.”
It’s believed that the total number of victims could be in excess of one hundred thousand.
The arrests come as a part of a wider investigation into GainBitcoin, a multi-level investment vehicle, which is now thought to have been operating as an illegal pyramid scheme. Investigators have found that investors were invited to contribute to a Bitcoin pool with the expectation of a healthy financial return. The reality of the scheme proved quite different however, as a spokesman for the Indian authorities explained;
“The victims were asked to invest one Bitcoin for which they would get a 1% return. But the company never gave them their returns; instead they fled from the place.”
GainBitcoin’s founder, Amit Bharadwaj (35), is already in police custody following his arrest in July. The narrative of this Bitcoin scam – which is believed to be the biggest in Indian history – took a bizarre turn when Bharadwaj offered to repay his investors. This gesture was met with derision by those who’d lost money in the scheme as it emerged that Bharadwaj only intended to repay his investors their initial stake in Indian Rupees rather than the full return in Bitcoin at its current market value as they had been promised. The move would have left investors back where they started and Bharadwaj holding a sizeable profit.
It’s as yet unclear whether a full recovery of investor funds is likely or even possible. When the cyber-crime unit of the Pune Police Department seized wallets controlled by Bharadwaj, they were found to contain only 3.31 BTC of an expected 5,372 BTC. Victims of the scam may find themselves waiting a long time for any firm answers as to the whereabouts of their investments. Bharadwaj is known to own numerous offices in Dubai and has 10 businesses registered in his name in the British Virgin Islands, Estonia, Dubai, Hong Kong, Singapore and the United States.