Investors Lose Thousands of Dollars to Malaysian Crypto Ponzi Scheme

Omar Faridi
  • Over 12 Indian businessmen have reportedly “lost lakhs” or thousands of dollars in a Malaysian crypto Ponzi scheme.
  • The scheme’s Indian agents have been booked under criminal breach of trust for “dishonestly misappropriating” entrusted property.

Over 12 Indian investors have reportedly been scammed by a cryptocurrency firm in Malaysia. The businessmen claim they have “lost lakhs” of rupees, or thousands of dollars, after being duped by a Malaysian company into investing in a fraudulent crypto-based multi-level marketing (MLM) scheme.

Deputy Commissioner of Police (DCP) in Dwarka, a city in the Indian state of Gujarat, stated that the crypto firm’s agents had been charged with “cheating” under Section 420 of India’s Penal Code (IPC). The agents were also booked under criminal breach of trust for “dishonestly misappropriating” entrusted property.

Based on a preliminary investigation, the businessmen from India’s capital city. New Delhi, came across the Malaysian company’s promoted services on a number of local media outlets. The investors also reportedly attended a conference the firm held March 2017.  

The unsuspecting businessmen were told that the company’s digital currency was listed and actively traded on several crypto exchanges. Later on, the investors were also introduced to a different scheme that promised quick and sizable returns, after being told many other investors were profiting.

According to an officer assigned to the investigation,

The complainant was told that for a minimum joining fees of Rs 80,000, they will get some crypto coins and a trading account registered with the company. They were also told that through multilevel marketing scheme, if more people join through them, they will get more profits.

Unnamed police officer

Crypto MLM Scheme

The businessmen decided to invest in the MLM scheme and opened accounts by reportedly paying Rs 1 lakh (about $1450) to one of the firm’s Indian representatives. Investigating officials revealed the complainants were asked to take part in a Ponzi scheme in which they had to get two or more of their friends to buy the company’s cryptocurrency for around Rs 1 lakh.

In September 2017, the company’s cryptocurrency was delisted from exchanges for no apparent reason, which saw its value plummet to 0. In an attempt to calm the anxious businessmen, the Malaysian crypto firm said it had launched a new venture that would yield high returns, but only after some time.

The investors soon found that they were unable to withdraw funds from their accounts. Officials have revealed they’ve so far registered two first information reports (FIRs) from those affected by the scheme. The firm’s blockchain data is being reviewed while its Indian representatives are being interrogated by local police.