In brief:
Indian police have arrested two individuals who had allegedly cheated over 5000 people in a Bitcoin Ponzi scheme that swindled 300 bitcoins worth approx. USD $2.6 million at current prices.


Nowadays, cryptocurrency fraud cases are being reported from different corners of the world. Latest in line, Indian cops have arrested two individuals for allegedly cheating over 5000 victims. The duo is accused of operating a bitcoin Ponzi scheme that swindled some 300 bitcoins worth approximately USD $2.6 million at current prices.

According to the reports, both accused ran a multi-level marketing (MLM) scheme, under the name “Bitmineplus” which used to incentivize investors to lure in others into the scheme. The investors were asked to deposit bitcoins with the company while high returns were promised. The company’s website states to offer monthly returns as high as 12%.

The Times of India reported that since its launch in December 2016, the company began seeking investments. It used to lure investors by offering 12% returns, along with 5% referral income for early investors with an additional 10% in commissions for bringing in more people.

Initially, to lure people into the scheme, investors were paid returns in bitcoin. Afterward, the company began offering dividends in its own custom-created cryptocurrency, ‘BMP’, that had no inherent value.

“Their basic idea was to kick-start a multilevel marketing scheme involving bitcoins. The people were given monthly payouts and additional income for referring the scheme to more people,” stated an investigating official.

Ultimately, after cheating more than 5000 individuals for over a year, the operators fled away with investors’ money. A senior police official said,

“Jangra [the mastermind behind the ponzi] had planned to shift his investors to his own cryptocurrency after getting a good sum of investment, but rising debt and the daily pressure from his investors made him flee with the money.”

Moreover, to gain the confidence of people, the company used to throw lavish parties at 5-star hotels. Finally, the scheme collapsed in February 2018, leaving over 5,000 victims high and dry. Now, the Indian police has arrested the duo accused of the fraud.

Anyesh Roy, Deputy Commissioner of Police (cyber Cell), said, “We have identified at least 5,000 IDs which have been duped. For the first few months, the income came in but eventually, it stopped after which the investors started to ask questions,” reported the Hindu.

In past few months, the incidents of such frauds involving cryptocurrencies have become rampant in Asian countries. For instance, the Vietnamese cryptocurrency-related ICO fraud case involved 15 trillion dongs, about USD $660 million which deceived around 32,000 citizens. Likewise, in China, a pyramid scheme which claimed to be a blockchain platform swindled 80 million yuan (USD $13 million) from 13,000 investors. In such fraud cases, conmen cheat naive investors by offering high short-term gains on cryptocurrency investments.


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