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.

UK's Regulator Warns Against Fraudulent Firm Cloning Financial Giant TP ICAP

The UK’s financial regulator, the Financial Conduct Authority (FCA), has uncovered another allegedly fraudulent crypto-related scheme.

On Friday (May 24, 2019), the FCA revealed that a company called ICAP Crypto had been impersonating an established firm known as ICAP Europe Limited. ICAP Crypto reportedly attempted to lure unsuspecting investors into a potential scam involving cryptocurrencies.

Using Company Details Belonging to Legitimate Financial Firms

While ICAP Crypto’s management does not claim its services are regulated by the FCA, the allegedly fraudulent firm has been using the company details that belong to legitimate UK-registered financial service providers.

The FCA has warned that the potential scammers operating ICAP Crypto may be using the company license information of established firms in order to lure investors into investing into a fraudulent crypto scheme.

According to the FCA, ICAP Crypto has provided contact information which may be “mixed” with details that belong to TP ICAP, one of the largest global interdealer brokers. Moreover, the FCA cautioned users that ICAP Crypto has launched a website that is not licensed by the FCA to offer financial services.

No Details Regarding Crypto Services

There’s also no association between the management and services provided by TP ICAP and ICAP Crypto, the UK’s financial regulator clarified. Furthermore, the FCA’s investigation has revealed that ICAP Crypto appears to be offering various crypto-related services including a platform to launch initial coin offerings (ICOs).

Although ICAP Crypto seems to be offering several different cryptocurrency-related products, the FCA found that the allegedly fraudulent firm has not provided any specific details regarding its services.

ICAP Crypto’s management states that its services include “a sophisticated blend of engineering with experience to empower thousands of marketers to access markets around the world through the use of digital currency entirely outside the traditional financial system.” However, it remains unclear what type of services the company actually offers.

FCA Planning To Draft Comprehensive Crypto Regulations

In January 2019, the UK’s financial regulator called for increased regulatory oversight over the leading European nation’s cryptocurrency market. In order to create regulations for digital assets, the FCA launched a consultation which requested feedback regarding how to regulate crypto transactions.

The FCA had specifically asked for feedback on how to regulate crypto exchanges, digital asset payment processing services, wallet providers, and broker dealers offering crypto derivatives.