The police in India have arrested four suspects with links to KBC cryptocurrency scam. The four allegedly launched the scam in early 2019, promising their investors incredible returns. However, the police alleged that they ended up making off with the investors’ money, with some losing as much as $183,000.
The Criminal Investigations Department (CID) of the India’s police force arrested the four in the city of Surat, a report by the Times of India revealed. The CID is still after two more suspects whom it accuses of promoting the scam.
According to the police report, the four launched KBC Coin six months ago. They then lured investors with the promise of incredible returns. For every 10 paise ($0.0015) invested with the project, the suspects allegedly promised a return of 10 rupee ($0.15). The value of one KBC Coin had been pegged at 10 paise during its launch. To onboard more investors, one of the promoters who has since fled from the police opened offices in four other towns.
Unfortunately for the investors, this was just another pyramid scheme. One of the investigators explained, “The first investor in the chain would get an incentive from the last circle of investors. This offer played a major role in bringing in more investors to the company.”
The police have asked the victims to report their complaints. A senior CID official told the publication, “We have asked the citizens to come forward with their complaints about the same or other schemes with similar modus operandi.”
The city of Surat has become a hub for cryptocurrency scams. In 2016 when the government of India enforced demonetization for some bank notes, there was a lot of cash from the local businesses which they needed to get rid of. Crypto startups offered the best returns for these investors, a CID official told the publication, comparing the crypto startups to the local Dabba trading.
He commented, “It works like a private stock exchange – colloquially known as Dabba Trading. Here, the people invest in stocks, and money also changes hands, but it never gets reflected in actual stock trading. These cryptocurrency promoters lured investors with very high returns. Like any Ponzi scam, some of the investors got money and it lured more to invest.”
As reported in February, police in India booked an entrepreneur whom they accused of defrauding 12 investors to the tune of $259,000 through KBC Coin. The accused had allegedly lured a Mumbai-based agricultural officer into his scam who ended up inviting 11 of his colleagues.
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