Betteredge first hears about the Moonstone when Franklin Blake shows up before Rachel's birthday party.
They're worried that the Indians are going to try to steal it, so they deposit it at the bank for safe keeping.
The night after the birthday party, the diamond disappears!
Betteredge notices that Rosanna Spearman, one of the servants, is acting strangely, but he assumes it's just because she's in love with Franklin Blake.
Betteredge helps the detective, Sergeant Cuff, with his preliminary investigations, right up until Rosanna Spearman commits suicide.
They aren't able to follow any more clues until Franklin Blake gets back from Europe.