Crypto Scammers Busted for Offering Fraudulent 'Halal' Investment Scheme

  • Indian citizen Syed Fareed and his son, Syed Afaq Ahmed, had reportedly been luring investors with a fraudulent crypto investment scheme. 
  • The father and son had misused Islamic scholars to promote a fake "halal" digital asset investment opportunity. 

Indian citizen Syed Fareed and his son, Syed Afaq Ahmed, have reportedly been involved in a fraudulent cryptocurrency investment scheme.

Both Fareed and Ahmed had launched what now appears to be a Ponzi scheme - which was cleverly disguised as a seemingly lucrative digital currency investment opportunity.

Indian authorities found that Ambidant Marketing and investment firm, run by Faheed and Ahmed, was offering fake “halal” crypto investment contracts, while also misusing Islamic scholars to lure Muslim investors.

Indian Authorities Clamp Down On Crypto Firms

Ambidant Marketing’s representatives had told unsuspecting investors that their cryptoasset investment plans were Sharia-compliant, meaning that they were in accordance with Islamic law.

After India’s reserve bank (RBI) declared that digital currencies were not legal tender, the nation’s Enforcement Directorate, a local law enforcement and intelligence agency, began investigating potentially fraudulent crypto-related businesses in the country - including Ambidant Marketing’s “halal” crypto investment contracts.

Notably, Ambidant Marketing had been issuing huge payouts of up to 50 percent (of total investment) to its investors when it first started. However, the payout amounts were lowered as more investors began participating in the scheme.

At first, the returns were cut in half to 25 percent, then to 11 percent, and then the company stopped payouts completely - as its last 9 percent monthly return was in January 2018.

Fake "Halal" Investments

Ambidant Marketing has reportedly not made any additional payments to its investors since January, however, some people who made very large investments have received flats (apartments) as a type of return for their contributions.

As mentioned, both Fareed and Ahmed had involved Muslim scholars in their fraudulent crypto investment scheme - as they were used to make misleading statements that claimed the company was operating a “halal” business.

The Enforcement Directorate issued the following statement regarding Ambidant’s operations: 

During the investigation, it came to the fore that the scheme run by the company is surely a potential Ponzi scheme. In view of the above, ED has written to the RBI (Reserve Bank of India) to have another look into the matter and protect the interest of the investors/depositors at large who are being duped in the name of Islamic banking/halal investment.

Enforcement Directorate

Income Tax Department Goes After High Net Worth Investors

At the time when cryptoasset prices had reached their all-time highs (in late 2017 and early 2018), and also before the RBI had instructed local banks to stop offering banking services to Indian citizens dealing in cryptos, Ambidant Marketing’s questionable business had been running smoothly.

When Indian authorities began clamping down on digital currency investors and the nation’s income tax department issued notices to high net worth cryptoasset traders, Ambidant Marketing was among one of the main companies targeted by the country’s regulators.

There were over 500,000 tax notices sent to Indian crypto investors and Ambidant received one as well. Presumably, Ambidant's Ponzi scheme may have caught the attention of India's law enforcement agencies at this time.

Israeli Hacker Indicted For $1.75 Million Cryptocurrency Theft

A hacker from Tel Aviv named Eliyahu Gigi was recently indicted for his alleged role in stealing roughly NIS 6.1 million (or $1.75 million) in cryptocurrencies from people in numerous different countries, including Germany, Belgium and the Netherlands.

According the indictment filed this week, Gigi operated numerous scam websites that infected computers with malware that would steal cryptocurrencies that were stored on the devices.

The hacker stole nearly $2 million worth of bitcoin, ethereum, and dash, before they were arrested in June of this year. Gigi carefully covered his tracks by attempting to use remote servers and doing his best to conceal the cryptocurrencies and the wallet addresses that they were stored in.

He then transferred the currencies between different wallets, split them into different cryptocurrencies and used other tactics to obfuscate the ownership of the funds.

During the investigation, it was initially suspected that Gigi was guilty of stealing $100 million, however, once the investigation was concluded, that number was significantly scaled down to less than $2 million.

According to the Israeli publication Globes the investigation was conducted by the Israeli Police's cyber unit, and led to the arrest of Gigi and his younger brother, a 22-year-old demobilized soldier. The news outlet adds:

At the outset of the investigation, suspicions were raised that the two brothers had stolen $100 million from digital accounts kept in bitcoin through an international fishing fraud. The indictment eventually filed was against only the older brother, and the initial suspicions that $100 million had been stolen were scaled down to NIS 6 million. [$1.75 million]

Police were initially tipped off to the crime after receiving reports the hacker was sending messages to users on cryptocurrency forums, directing them to a website that claimed to offer wallet management software.

Some of the users who received the message thought that the website looked suspicious. Worried about their security, they reported the websites and Gigi's forum accounts to police.