Gain Bitcoin Cryptocurrency Scam : Supreme Court Transfers Cases To CBI; Trials Shifted To Delhi CBI Court

The Supreme Court on Wednesday(December 12) transferred the cases relating to the “GainBitcoin Ponzi Scheme” to the Central Bureau of Investigation and transferred the trial of the cases to the CBI Court, Rouse Avenue, New Delhi.

The bench comprising Chief Justice of India D.Y. Chandrachud, Justices J.B. Pardiwala and Manoj Misra passed the order disposing of a batch of writ petitions filed by the accused in the case seeking interim protection and consolidation of FIRs amongst other reliefs.

Remarking that protection cannot be granted to the accused in writ petitions, the bench asked the petitioners to seek remedies before the trial court by filing bail applications. The Court vacated a previous interim order passed in August 2019 granting anticipatory bail to the accused. The amount of Rs 1 crore deposited by the accused with the Supreme Court registry and their passports were directed to be transmitted to the trial court.

Appearing for the  petitioners, Sr. Advocates Mr Siddharth Dave, Mr Krishnan Venugopal, and Mr. Deepak Prakash, along with Advocates Nachiketa Vajpayee, Divyangna Malik, Vishnu Priya pleaded that bitcoin by far has not been expressly recognised as illegal. Since the technical complexities involved are novel, they argued that an expert agency should investigate the matter.  

Highlighting that the legality of Bitcoin is a grey area, Dave expressed, “The Government of India cannot answer whether it(Bitcoin) is legal or illegal...see this prayer please appoint a centralised agency...Pune police was handling it... Bitcoin was not illegal. It depended on market fluctuations. They don't get it. Hundreds of people filed cases against me. ED has said that it is not a legal tender. If it is not legal, all of it is illegal so they're asking for proceeds of crime? This is why we came under Article 32 to ask - is it legal or illegal? Where is that act which was going to be passed in parliament…”

To underscore the need for an expert probe agency, another counsel claimed that Magistrates, unaware of the virtual currency concept, were asking to "show this Bitcoin”.

Appearing for the Enforcement Directorate, Additional Solicitor General Ms Aishwarya Bhati submitted that the family of the accused has been uncooperative and stressed the need for custodial interrogation. She further reminded the bench that the matter was “not about the legality or illegality of Bitcoins” but of fraud and misappropriation of the investors' money to the tune of 20,000 crores. Additional Solicitor General S.V. Raju appearing on behalf of the CBI said that chargesheets have been filed by the police agencies in many of the cases.\

Background

As per the allegations, the main accused Amit Bhardwaj (now deceased) along with his family members had set up a firm Variabletech in Singapore in 2014, wherein they launched a “GainBitcoin MLM Scheme” offering mining contracts to their customers. As per these mining contracts, the customers were told that they would receive 10% monthly returns per investment for a period of 18 months in the Bitcoin currency (a digital cryptocurrency). Due to the volatility of the bitcoin market, the business model failed and customers across the country alleged fraud and misappropriation of their funds, by way of this “Ponzi Scheme” on the part of Bhardhwaj and his family members. The accused have allegedly collected 80,000 bitcoins valued at approximately Rs. 20,000 crores.

As of date, a total of 40 FIRs in several states including Maharashtra, Delhi, Karnataka, Chandigarh, West Bengal, Himachal Pradesh, Jammu and Kashmir, Punjab, Gujarat, Haryana, Rajasthan and Uttar Pradesh have filed against Amit Bhardwaj, his brothers Ajay Bhardwaj, Vivek Bhardwaj and father Mahendra Kumar Bhardwaj.

Claiming the matter to be purely civil in nature, the Accused filed a writ petition in the Supreme Court seeking interim protection and consolidation of FIRs in November 2018. It was only on April 3, 2019, that the relief was granted. On January 15, 2022, Amit died of a cardiac arrest.

The previous developments and observations on the case by the Supreme Court can be found here.

The lead petition Ajay Bharadwaj v Union of India was filed through AoR Jayant Mohan. Advocate Sreeram Parakkat represented certain complainants who intervened in the matter.

Case details: Ajay Bharadwaj v Union of India W.P.(Crl.) No. 231/2019