Indian Authorities Uncover $230,000 Fraudulent Crypto Investment Scheme

  • Another crypto-related crime has been uncovered in India.
  • One individual allegedly involved in the incident has been arrested, while four others believed to be involved have yet to be taken into police custody.

Police officials in India have reportedly apprehended Hardik Zadafiya, a local resident who has been accused of being involved in a fraudulent cryptocurrency-related scheme.

According to the Times of India, four other individuals allegedly involved in the crypto-related crime have not yet been arrested. As reported by local news sources, the accused reportedly lured unsuspecting investors into investing Rs 1.64 Crores (appr. $231,000) into a questionable crypto scheme. Although all of the details regarding the financial crime are not yet clear, investigating officers believe the accused may have embezzled a lot more funds from local residents.

Local sources report “an offence of cheating” has been registered by Indian police officials against Ashok Khmabhati, Kalpesh Lakhani, Nikunj Savaliya, Rakesh Mavani, and Zadafiya. In addition to being booked for cheating or financial fraud, the accused have been charged with criminal breach of trust under several sections of the Indian Penal Code.

Promising "High Returns And Commissions"

The five men named in the crypto-related crime report have reportedly been booked under the Prize Chits and Money Circulation Schemes (Banning) Act and the Gujarat Protection of Interest of Depositors (in Financial Establishments) Act of 2003. Police officials investigating the matter discovered that the accused allegedly launched a local crypto exchange called Bitstrades - after registering the company in the UK in January 2017.

As mentioned in the incident report, the five named individuals opened business offices in the Indian cities of Mota Voraccha and Puna. At these office locations, the accused had reportedly been offering “high returns and commissions to investors”, local sources said. These allegedly fraudulent schemes were being offered through various local online crypto trading platforms and other websites related to digital assets.

A police officer assigned to the case remarked: 

Majority of investors who lost money in the racket are yet to come forward. We hope that following the registration of the complaint, they will provide details of cheating about the accused to [local authorities].

"Sudden And Prolonged Crash" Warning Regarding Crypto Investments

Other details related to the investigation revealed that the accused had taken 190 investors on tours to Thailand and Singapore - presumably in an attempt to gain their trust.

In early January, Indian authorities warned local residents not to invest in digital assets like bitcoin (BTC) due to the “heightened risk” associated with such speculative investments. The nation’s government said crypto investments weren’t backed by Indian regulators.

An advisory issued by India’s Inspector General of a local police crime branch cautioned that cryptocurrency investments may result “in a sudden and prolonged crash” in which investors could potentially lose all their invested capital.