In a major crackdown on cybercrime, authorities exposed a cryptocurrency investment fraud of Rs. 800 crore and found a network spanning several Indian states. The STF Agra unit and Masuri police led an operation that resulted in the arrest of the mastermind, Jatindra Ram, who is believed to have plotted the scheme via digital trading platforms and referral-based networks.
The investigation shows that the accused established a large network among the investors in cities like Noida, Dehradun, Haridwar, Faridabad, and Delhi. Through its social media and network marketing tactics, the fraud grew exponentially over 7-8 years, targeting those interested in generating high returns on their crypto investments.
Victims were given the promise of easy money by trading in cryptocurrencies and were regularly introduced to websites that seemed legitimate but were a part of the fraud network. The magnitude of the operation implies that it has a very organised system.
One of the key aspects of the fraud was the use of the MT-5 trading platform, where investors were presented with fake profits. This strategy gave an illusion of plausibility and prompted users to invest larger amounts.
Initially, the investors were provided with small returns to gain trust. After the trust was built, victims were convinced to deposit more money. Complaints filed by victims highlight the extent of financial loss, with individuals reporting investments of between Rs. 55 lakh and 2 crore.
The network was run on a referral system, which was commission-based like a multi-level marketing (MLM) model. The participants were encouraged to get new investors, and they received commissions on new investors.
This was a structure that facilitated expansion at a multiplied rate, with the scam being spread in Uttar Pradesh, Delhi, Haryana and Uttarakhand.
By doing so, such models tend to cause a domino effect, as those who get engaged in it at the first stage are participants in promotions of fraudulent schemes, which only increase the scope.
According to cybersecurity experts, such scams are largely based on psychological manipulation. Fraudsters usually operate in two stages: the initial step, which involves gaining trust with small and noticeable profits, and then taking advantage of this trust to make bigger returns.
Statistics indicate that there is an upward trend in crypto-related fraud, with the growing use of digital assets and the absence of awareness among retail investors. The most common ones are fake trading sites and promises of unrealistic returns.
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Law enforcement is now following the money trails and online tracks to determine other people involved in the network. There is an initial sign that there might be several bodies and shell firms that were involved in money laundering.
The case raises the issue of the increasing size of Indian cyber-enabled financial fraud. Investigators suspect that its true extent may be even bigger as more victims emerge, considering that this network has already been linked with Rs. 800 crore.