Business

Steve Kaaru

Indian police bust $950,000 cryptocurrency pyramid scheme

The police in India have busted yet another cryptocurrency scam that allegedly robbed its investors of over $950,000. According to a report by the Times of India, the police also arrested six suspects who were behind the multi-level pyramid scheme.

It all started when Rajesh Miyani, a resident of Surat city, lodged a complaint with the police. Upon investigation, the suspects were found to have been defrauding their investors. The police arrested the six suspects on May 29 from different locations, the report revealed. The suspects were charged with several offences under the Indian Penal Code including forgery and fraud. They were also booked under the under Gujarat Protection of Investors and Depositors and Prize Chits and Money Circulation Schemes Act.

The suspects allegedly launched the Taurus coin website in December 2017 when the crypto hype was at extreme levels. The website promised investors who bought the Taurus tokens very high returns, luring quite a number of them in. The police estimated the total figure that the project defrauded its investors to stand at 6.67 crore ($954,000). The figure isn’t final and they expect more victims to come forward.

The incentive of the project was based on a multi-level marketing model, the default model for most pyramid schemes. To further their legitimacy, they opened offices in Surat city and claimed to be linked to top crypto companies in London and other major locations globally. Initially, they paid out returns to their investors, luring many more in, yet another trick employed by most pyramid schemes. However, in February 2018, it all came to an end. The Taurus coin website was brought down and the team made off without any notice to the investors.

The suspects allegedly claimed that they got the idea from watching many other fraudulent projects do the same thing, make millions and then getting away scot-free. While this is no excuse, it reveals a lot about the chaotic state of crypto regulations in India, a country that has recently weighed the possibility of totally banning all cryptos.

Due to the unfriendly crypto regulations, legitimate crypto exchanges have been forced to shut down or downscale operations. Already, Coindelta and Coinome have shut down, with Zebpay being forced to explore overseas markets.

While the legitimate institutions have been forced out, the fraudulent ones have continued to find a way to operate in the country which has a population of 1.37 billion people. Crypto scams in the country have been rife, with some defrauding their investors as much as $300 million.

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