This morning, a front-page advertisement in The Hindu announced the publication of an e-book on cryptocurrency (priced at Rs 1,499) authored by Amit Bhardwaj, Managing Director and CEO of a China-based mining pool that goes by the name of GBMiners.
A word of caution before you order it off on Amazon: The author of the e-book, Amit Bhardwaj, has been accused of running a Bitcoin Ponzi scheme through his companies Gainbitcoin and GBMiners, and there is currently a petition on change.org requesting his arrest for this allegedly fraudulent scheme.
According to his LinkedIn profile, Amit Bhardwaj is the founder of GBMiners, which he founded in October 2016. He is also the founder of AmazeMiners, an alt-coin mining company, since December 2016. Gainbitcoin is another firm where Bhardwaj is the CEO and operates a cloud mining service, according to information on its website. HightKart, one of India’s first Bitcoin-based e-comerce sites, was also founded by Bhardwaj, but it shut shop in early 2016.
GBMiners’ mining pool controls about 2.8% of the of the network hashrate, said data on Blockchain.info.
Here’s the thing: According to cryptocurrency news site Coinjournal, Bhardwaj is running a Ponzi scheme through his companies and the details given on the Gainbitcoin website are “absurd and false”.
“The investment claims made by Gainbitcoin are even more absurd when considering the fact that a cloud miner isn’t going to receive the full amount of income from their equipment without any expenditures,” said an article in Coinjournal.
Aria Thaker of The Caravan had interviewed Bhardwaj for a story on Bitcoins, and according to one of the articles published, Bhardwaj was evasive about questions regarding the relationship between GBMiners and Gainbitcoin.
“He repeatedly contradicted himself, and was evasive about the relationship between GBMiners and Gainbitcoin. He also admitted, with casual ease, that he had lied to his investors about crucial information regarding Gainbitcoin’s investments (“They feel good, right? When they get high information,” he told me about his customers, after admitting to using inflated figures on Gainbitcoin’s website),” said the article.
The change.org petition against Bhardwaj was started by one Zakhil Suresh. According to the petition, Suresh is a finance student, living in Kerala, and he, along with a couple of friends, after coming to know about Gainbitcoins, flew to Delhi and met up with Bhardwaj and invested in Bitcoins. They later tried to withdraw BTC from the service but were unable to as the transactions were pending and the company was not responding to any of their requests.
“He (Bhardwaj) said the mining pool of the company is in China and for every contract, we buy by paying 1 BitCoin, the Company would pay us 0.1 BTC for 18 months. One week after coming back to Kerala I opened 6 positions in his company by paying 6 BitCoins. Soon the website was closed down for maintenance. I requested for my first withdrawal after 3 weeks and now even after one and a half years – my withdrawals are still pending,” Suresh said in his petition.
Bhardwaj is also associated with a few other Bitcoin and cryptocurrency-based companies/products, which include Bitcoin wallet service CoinBank and Bitcoin payment processor PayBitz.
This is not the first instance of fraud and cybercrime related to Bitcoins. Earlier a Bengaluru techie got hacked and was robbed of Bitcoins worth over a lakh from his Bitcoin wallet.
With Bitcoin’s bull run in India there has been a rise in Bitcoin transactions in spite of the ambiguity about its legal status in India. The RBI has clearly alerted users about the risk related to Bitcoins and other cryptocurrencies.
Also read: Blockchain for n00bs: A definitive guide
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Update: We have reached out to Amit Bhardwaj for his comments on this matter and will update the story when we receive a response. Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.