Thousands of Indians are being attracted into investing in cryptocurrencies because of the high profits, only for some to fall into scamster’s traps.
These kinds of scams and Ponzi schemes started in India after ICOs became a trend in mid-2016. According to Kislay Chaudhary, who is a cybersecurity consultant in the country. However, they became rampant last year as cryptocurrencies became more popular world over. In fact, most can be tracing to the recent spikes in Bitcoin prices last year.
Scammers are finding it easy to dupe people in a market that is attracting around 2,500 people a day. However, who wants to share in the crypto profits. Many of them are attracting people into their Ponzi schemes while others are promising high returns on projects that do not exist.
Most of the scammers do not even use the ICO strategy as they want to take advantage of people. Thus following reports in the media and news articles of price spikes. However many of them do not understand how cryptocurrencies work.
Pramod Emjay, a portfolio manager in crypto-commodities, said,
“As far as ICOs are concerned, the idea can be used as a pretext to dupe people. But there is no necessity on the part of the persons running such scams to use the ICO strategy. Because their primary targets are people who have knowledge about the surge in bitcoin price. Through news articles, who want to go for lucrative investments but do not have much idea about how cryptocurrencies function”.
He said it is hard to establish the reliability of cryptocurrency exchanges with some even being busting for scams in the past few years. Again, many of those falling victims have no idea on how cryptocurrencies work. He said scamsters can even refer to random graphs and charts and deceive target audience.
This is happening even as Indian government awaits a report of an expert committee about cryptocurrencies. Before taking a decisive position on legalizing or banning cryptocurrencies.
India has previously busted similar schemes including a Ponzi scheme run under the name of OneCoin. OneCoin officials were even under arrest in April over the matter last year over alleges involvement in the Rs 75-crore illegal activity. Another example was the ATC coin busted last year October. In December, police busted a multi-crore Ponzi called Kashh coin.
Indians also continue to report similar activity to police, with Delhi police receiving complaints of at least eight scams since October last year. Others include Laxmi coin, LCC coin, an abbreviation for LiteCoin Classic, and Bullcoin. They are suspecting to be multi-level marketing schemes (or following this strategy) targets at duping people, police said. Ponzi schemes are projects where people are deceiving to invest and they are paying returns from other new investors instead of returns from actual business operations.
In one of the eight reports Ponzi schemes, the coins were selling at a rate of Rs 3.50 per coin and the users were promising large returns after a lock-in period.
Alok Kumar, a joint commissioner in the Delhi police’s Crime Branch, said,
“The accused organized lavish seminars in different places, including Mumbai, Chandigarh, Raipur, and Nagpur, for business promotion. At these seminars, they would lure people into investing in this coin claiming that its rate will cross the cost of bitcoin one day. They used to invite eminent personalities to these seminars to attract more and more people”.