New Delhi (Sputnik) — News reports emerging from India suggest that hundreds of people have been duped by conmen who promised huge returns for investing in virtual currencies that later turned out to be fake. Some were even handed metal coins by fraudsters who said such coins could be exchanged in banks for money.
Sputnik spoke to Mohit, a victim of crypto-currency fraud, who claimed that he along with 12 other persons had invested a huge sum of money on bitcoin-india.org in November last year. However, their Bitcoins were completely wiped out from their digital wallets in December. He said they had approached the Delhi police, but in vain.
"Police have registered a complaint against the owner of the website but did not take action. We even approached the Finance Ministry and Prime Minister's Office. Now the website owner who has our money is openly challenging us to drag him to court," Mohit told Sputnik.
Delhi Police say they are flooded with such complaints every day but have no instrument in place to deal with such fraud apart from registering the complaints under the law dealing with theft and criminal breach of trust. They have approached the Reserve Bank of India, the country's central bank tasked with controlling financial institutions to formulate clear-cut policies to deal with such frauds.
"People only approached us after the fraudsters ran away with the money. Despite several warnings issued by the government and the Reserve Bank of India, people are being lured towards these Ponzi schemes," a senior official from the Delhi Police cyber cell told Sputnik on the condition of anonymity.
"The websites are making false claims, but the ignorant are falling prey" he added.
The police claim they were, however, able to get hold of some clue about the modus operandi of the conmen with the arrest of 32-year-old Sonu Dahiya last month. Police trapped Dahiya with the help of a Youtube video of a seminar his gang had organized to promote KashhCoin.
The Delhi Police say they have registered at least eight such complaints in the recent past, filed by different groups of victims. The complaints were mainly against websites that sold virtual currencies that go by different names like LaxmiCoin, BullCoin, KashhCoin, and LiteCoin Classic. The victims approached the police after the web platforms either disappeared or deleted the victims' transaction history. Dealers trading LaxmiCoin and BullCoin allegedly offered investors physical metal coins and told them to hold the coins until the price surged so that they could be sold for a handsome profit, according to the police.
The victims are mainly wealthier people; not only from small towns like Sonipat, Meerut, Panipat, and Pune but also metropolitan cities like Delhi and Mumbai.
Most of the web platforms dealing with such fake crypto-currencies promise anonymity. "Anyone can use the wallet and transact with the anonymity. No personal identifying information is required to create and use BullCoin addresses for sending and receiving funds," BullCoin's website reads.
BullCoin, which calls itself the "mining revolution," was allegedly launched by a person from Delhi's Paschim Vihar, who is untraceable after duping several investors out of millions of dollars, according to the police, who are further investigating the case.
Another company, LaxmiCoin that describes itself as India's first digital currency, claims in its website that it has yet to start offering Initial Coin Offers (ICOs) while warning investors not to get duped by exchanges that go by similar names.
"Yes, there are some people spoiling our name. We have detected laxmicoin.trade & laxmicoin.ltd & laxmibitcoin.co are cheating people. We are working to take action on it. Don't trust fake portals," the LaxmiCoin website reads.
@Laxmicoin #laxmicoin #lakshmicoin #bitcoin Evryone is launching their own version of coins & am sick of this trend. Will only be excited if government launches some coin soon. As after Laxmi coin there are number of people in line to launch their coin with no real advantage! pic.twitter.com/jpMX2g6bFr— Arjun (@apshergill91) November 23, 2017
The Indian government, in its latest warning on December 29, 2017, underlined the various risks involved in investing in virtual currencies.
"There is a real and heightened risk of an investment bubble of the type seen in Ponzi schemes, which can result in a sudden and prolonged crash, exposing investors, especially retail consumers, losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes," India's Ministry of Finance said in a statement.
The RBI had also warned that traders of virtual currencies are exposed to legal risks since exchange platforms are set up in various jurisdictions whose legal status is unclear.