Who is Amit Bhardwaj — the man responsible for one of India’s biggest Bitcoin scams? How can Indian investors avoid falling for such scams?

The arrest of Amit Bhardwaj unearthed one of the biggest cryptocurrency scams in India. The scale of his operations were truly mind boggling,  with gullible investors scammed for close to $300 million (Rs 2000 crore approximately).

Who is Amit Bhardwaj?

Amit Bhardwaj’s LinkedIn profile says that he is an Infosys alumnus with a background in software development. He entered the cryptocurrency space five years ago and launched a ton of cryptocurrency-related ventures — GainBitcoin, GBMiners, AmazeMiners, MCAP coin, HighKart.com and CoinBank. Believe it or not, he even authored a couple of books around cryptocurrencies.

What was the GainBitcoin scam?

GainBitcoin had the makings of a classic ponzi scheme which promised investors assured returns of 10% on their Bitcoin holdings per month for 18 months. The GainBitcoin scam followed a typical multi-level marketing scheme which promised commissions to people who enrolled others on to the program.

You can read this Quora thread to find out detailed stories of investors who were duped by the Gainbitcoin scam. According to these accounts, when investors started asking Gainbitcoin for their share of money, they were asked to take their payouts in a cryptocurrency called MCAP, which was floated by Amit Bhardwaj himself.

What is MCAP?

Called the ‘Bitcoin Growth Fund’ (That’s right!), MCAP seemed to have been a front which was used to re-route investor money from GainBitcoin. In fact, MCAP is also listed on a big exchange like HitBTC. At the time of writing, its price is $0.07 after tanking 64% following Bhardwaj’s arrest. Surprisingly, it still has a market cap of $738,824 (110 BTC) with a rank of 783 on Coinmarketcap which tells you the scale of the scam.

What is GBMiners?

According to a Factor Daily report, GBMiners stands for GainBitcoin Miners, which at one point accounted for 3.8% of the global BTC hashing power. However, a lot of mystery surrounds the origin and workings of GBMiners. The report even goes on to say that the investments made in GainBitcoin were powering the mining operations of GBMining.

In fact, many people had even called out these Ponzi schemes a long time ago. Coin Journal’s Kyle Torpey had reported about this back in 2017. The Quora thread mentioned above also dates back to March 2017. A Change.org petition was also launched against Amit Bhardwaj early last year.

How can Indian investors avoid falling prey to such scams?

  1. Cryptocurrencies are still not regulated in India and no person or business can offer investing and advisory services around crypto assets. Do not engage with such entities.
  2. Never invest in schemes which offer guaranteed returns. No market-linked financial instrument can ever promise assured returns, be it stocks, mutual funds or cryptocurrencies.
  3. Never entrust any one else to hold your cryptocurrencies for you. Digital currencies enable you to be your own bank and you should be solely in charge of your crypto assets. If some one runs away with your hard-earned money, you have no recourse. In fact, preferably don’t even store cryptocurrencies on exchanges since these are vulnerable to hacking. Buy a good hardware wallet like Ledger Nano S and store your digital assets safely.
  4. Bitcoins and other cryptocurrencies are not legal tender in India. So, kindly do not do take part in any business transactions with cryptocurrencies. You will be on the wrong side of the law.
  5. Before investing any in any cryptocurrency, do a thorough research about the project. Look at reports from this channel, trustworthy news sites and other genuine resources before arriving at an investment decision. If you go wrong with your decision, you have only yourself to blame.
  6. Understand that when you decide to invest in cryptocurrencies, you are playing with fire. Cryptocurrencies have the potential to generate returns greater than many financial instruments, but they are also affected by many economic, regulatory and technical factors beyond our control. Only invest what you can afford to lose. Do not over leverage to invest in cryptocurrencies.

Stories like these bring negative media attention to cryptocurrencies and stop the widespread adoption of this revolutionary technology. Just like other ponzi schemes in the past, bad actors also exist in the world of cryptocurrencies. The onus is on the investors to learn from such scams and avoid falling prey to these in the future. As long as investors continue to be unrealistic with their expectations, scamsters like Amit Bhardwaj will continue to thrive!

Originally published on Medium