India’s investigation into one of its largest cryptocurrency fraud cases has taken a new turn. The Central Bureau of Investigation has arrested Ayush Varshney, Co-Founder and Chief Technology Officer of Darwin Labs Private Limited, in connection with the GainBitcoin crypto scam.
Officials said the alleged scheme promised investors unusually high returns through Bitcoin-related investments. However, investigators believe the funds were not used for legitimate cryptocurrency mining or trading activities and were instead misappropriated.
The case is being investigated under Sections 120B, 406, and 420 of the Indian Penal Code, along with Section 66 of the Information Technology Act, 2000.
According to the CBI, a Look Out Circular had been issued against Varshney as he was reportedly absconding. On March 9, immigration officials at Mumbai Airport stopped him while he was allegedly attempting to leave India. He was then handed over to the CBI and formally arrested on March 10.
Investigators say the GainBitcoin scheme convinced investors that they would receive steady monthly returns in Bitcoin through a cloud mining programme. Authorities are now examining whether the operation functioned like a Ponzi scheme.
The probe suggests that returns to early investors may have been paid using money from newer participants rather than profits from genuine mining activities.
When the operation reportedly struggled to maintain payouts, investors were instead given a cryptocurrency token called MCAP instead of Bitcoin.
During the investigation, the role of Darwin Labs Private Limited and its co-founders, including Sahil Baghla and Nikunj Jain, came under scrutiny. Officials said the company helped develop the technical infrastructure linked to the alleged scheme.
Investigators noted that Darwin Labs designed and deployed the MCAP cryptocurrency token along with its ERC-20 smart contract.
The company was also involved in creating several platforms connected to the project. These included the GBMiners.com Bitcoin mining pool, a Bitcoin payment gateway, the Coin Bank Bitcoin wallet, and the GainBitcoin website used by investors.
Authorities said the GainBitcoin investigation involves fraud allegations worth thousands of crores and has affected investors across multiple states.
The CBI confirmed that the probe is ongoing, and further developments in the case are expected.
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