The Enforcement Directorate has arrested one of the founders of event management company Katalyst Entertainment from Delhi, Nikhil Mahajan, 39, in connection with an alleged cryptocurrency scam running into ₹6,606 crore involving Ajay Bhardwaj and his late brother Amit Bharadwaj and their firm Variabletech PTE Ltd.

Mahajan is the second person to be held in the case after the arrest of one of the promoters of the firm, Simpy Bhardwaj, wife of Ajay. He was produced before the special PMLA court on Wednesday, which remanded him to ED custody till January 25.

The Bitcoin scam

"Already a woman accused, Simpy Bhardwaj, is behind bars in connection with this crime. In the investigation it was found that the late Amit Bhardwaj, Mahender Bhardwaj, Vivek Bhardwaj and other multilevel marketing agents and associates have collected 80,000 Bitcoins valued at ₹6,606 crore as of November 2017 from gullible investors and none of them was paid any returns," the court said while remanding him to custody.

"In this way, thousands of investors had invested their hard-earned life earnings and savings and converted the same into Bitcoins to invest in the said company's scheme and ultimately lost everything."

The court further said, “Papers of investigation prima-facie indicate the role attributed to the accused… that he propagated and promoted the said scam by conducting seminars in Dubai and for that he received 40 Bitcoins. According to the ED, the accused and Ajay Bhardwaj are in continuous possession of proceeds of crime, concealing and utilising the same. It is a specific contention of ED that the present accused is an active participant of the wider conspiracy of his scam and has played an active role in acquisition and concealing the proceeds of crime.”

ED reveals probe findings

The ED contended that during the probe, Mahajan admitted his involvement in the advertisement of various schemes of Bharadwaj and his firms. In the reply, Mahajan admitted that Katalyst Entertainment (Katalyst) used to manage the publicity events arranged for Bharadwaj's firms. Besides, he also admitted that his company managed to get celebrities for two events and they included actresses Neha Dhupia, Sunny Leone, Sonal Chauhan, Prachi Desai, Aarti Chabaria and others.

In his statement, Mahajan said, "The payments were made in BTC to the Bitcoin exchangers in Dubai, which in turn were used to pay further for location and even managing company. In total about 30-40 Bitcoins were paid."

Bitcoins used to conduct events

It was also brought to the notice of the court that Mahajan was confronted with the statement of Amit Bharadwaj recorded in June 2018. Amit had confirmed that 40 Bitcoins were paid to Mahajan for holding various events. Mahajan however said that the payments for the events and celebrities were done after selling Bitcoins in the Dubai exchange.

The court while remanding Mahajan to ED custody observed, “This prima facie indicates that when the accused was confronted with the statement of Amit Bhardwaj, he clearly admitted how he received 30-40 Bitcoins from him [Amit]. This being so, the contention of the accused in the court that he did not receive any Bitcoin nor the statement of Amit Bhardwaj indicates the same, prima-facie indicates that he is suppressing the material fact and concealing the proceeds of crime."

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The story was originally published on the Free Press Journal.