Indian director held in connection to $3M crypto fraud probe

An Indian director of an audit firm has been held in connection with a $3 million crypto fraud probe that has gained widespread attention across India. In a new twist to the GainBitcoin cryptocurrency fraud case, an official of the audit firm appointed by the Pune Police and Cyber Police investigating the case has been arrested by the Mumbai police.

According to reports, the official of the audit firm was arrested for stealing seized digital assets worth about Rs. 30 crore ($3.3 million), in alleged collusion with police personnel. The Economic Offences Wing (EOW) released a statement saying it arrested an official of the Indian audit firm Gaurav Harish Mehta, and is looking for other co-conspirators, including officers attached to the investigations whose identities have cropped up in the investigation that spanned from Mumbai to Pune.

Indian director held in connection with stolen crypto

The case originated from the GainBitcoin fraud case that was popular in India around 2018. The case was registered at Nigdi and Dattawadi police stations in Pune, under various sections of the IPC, MPID Act, and the Information Technology Act. Mehta’s lawyer, Aftab Qureshi, argued in a court sitting that the police merely falsely implicated Mehta. He claimed that his client was called in to assist with the investigations and arrested him in the process.

Qureshi argued that the police lied to Mehta, pretending that he was going to assist them with the case, but instead, they are making him the scapegoat. Despite his claims that his client had been falsely accused, the 47th Metropolitan Magistrate Court refused his plea and asked that Mehta be remanded in police custody as investigations continue and new information continues to unfold. It remains unknown if Mehta will be eligible for bail later in the year.

The GainBitcoin scam involved several unscrupulous elements luring Indian investors with the promises of high returns through cryptocurrency investments. Like most crypto scams, the perpetrators targeted Indian residents with little or no knowledge about how crypto worked, but were hoping to make profits through the investments. However, things didn’t go as planned for everybody as investors discovered that they had all been dragged into fake crypto investments, which eventually led to the police being involved.

After several back-and-forths with investigations, the police were able to raid the location of the scammers, get their hands on sensitive forensic materials, and subsequently appointed an Indian audit firm to help investigate the fraud. Now, the police are accusing the firm that they hired of siphoning more than Rs. 30 crore. According to the Indian police, the force appointed advocate Ravindranath Patil, who had worked as a director with KPMG, as a technical expert in the case.

Police continue investigations into the stolen assets

Patil acted as the technical expert when the Indian police engaged KPMG in August 2018 to conduct a forensic audit of the seized cryptocurrency wallets. Subsequently, another firm was appointed to act as an independent forensic auditor. During this process, crypto hardware wallets seized from the accused persons were provided for technical examination. Investigations claimed that instead of safeguarding the seized digital assets, officials of the audit firm embezzled the funds.

Investigators attached to the Indian police claimed that the officials colluded with a few police officers, physically moving digital assets from the wallets and diverting the funds to private exchanges and hardware wallets. The embezzlement was discovered during a technical and digital footprint analysis carried out by the Indian police. DCP Sangramsingn Nisandar confirmed the incident and claimed the Indian police seized several electronic devices in raids at different locations in Mumbai and other cities.

The Indian police mentioned that the probe has revealed several large crypto transactions carried out that have been linked to the accused. They mentioned that the case is expected to widen, as they anticipate the inclusion of more officers of the Indian police. In addition, they also expect that several influential figures with a stake in the digital assets will surface in the coming days. However, the investigation into the case remains ongoing as they anticipate what is to come.

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