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Indian police dismantle local gang behind recent 1.5M crypto scams in Odisha

Law enforcement officials in Eastern India’s Odisha state have seized a local gang deemed responsible for recent cryptocurrency scams.

The string of cryptocurrency scams, notably the “Yes World Crypto Token” Ponzi scheme, are characterized by multi-level marketing and money circulation schemes. The group’s illicit schemes have victimized thousands of people, with losses totaling over $1.5 million.

Last Saturday, Indian police arrested the scheme’s principal perpetrators, including the leader of the gang. Local media reported that law enforcement is still on the lookout for the remaining people implicated in these scams.

These developments underscore the escalating frequency of crypto scams in India despite heightened government scrutiny aimed at regulating the sector.

Bolangir operations

The apprehended criminal gang previously operated in Bolangir, well-known to be one of the best cultural heritage in India. The gang employed various fraudulent tactics to trick their victims.

One of the tactics used included attracting the criminals’ potential targets with enticing offers such as tours to Thailand and Dubai. Their modus operandi involved using several websites and applications to carry out the scams. To further obscure their illicit activities, they established a multi-level marketing organization named “Pegmatite Sustainable Solutions Private Limited.”

In July 2022, the accused and his accomplices introduced a digital currency with an initial value of $0.0012. Subsequently, they falsely claimed a significant surge in value to $0.010, duping unsuspecting investors.

The gang employed various manipulative tactics, encouraging people to invest in their deceptive coins by inflating their perceived value. Additionally, the police seized crucial documents and a high-end vehicle from the custody of the accused.

Indian investors as easy targets

Local media surveys indicate that Indian investors are particularly susceptible to cryptocurrency scams, with many instances occurring on the Telegram messaging app.

The vulnerability of the Indian audience stems from a lack of regulatory oversight, inexperienced investors and limited knowledge about digital assets. These reasons further provide scammers with an easy target.

Similar incidents have happened several times before, with one of the most recent scams happening to a Delhi-based Indian engineer, Ankit Chaudhary. Chaudhary recently suffered a loss of ₹12 lakh (approximately US$14,436) on a scam via Telegram. Initially attracted by modest returns, Chaudhary progressively increased his investments, ultimately totaling ₹12 lakhs, without receiving any returns.

Another engineer from Bengaluru, Karnataka state, suffered the same fate, with a much more significant loss. Trusting a stranger claiming to represent a global investment firm on Instagram, the 53-year-old engineer invested over $114,000 worth of Bitcoin in January.

Recognizing the urgency to address this issue, the Indian government has initiated stricter regulations to combat the rising tide of crypto scams in the country. In response to non-compliance with anti-money laundering laws, the government has blocked the URLs of nine cryptocurrency exchanges, including major platforms like Binance and Huobi.

Notices from the Financial Intelligence Unit (FIU) have compelled these exchanges to cease operations within India. Users in India are strongly advised to transfer their cryptocurrency assets to FIU-registered Indian exchanges for legal protection and adherence to regulations. Presently, 31 crypto businesses in India, such as UnoCoin, WazirX, ZebPay, CoinDCX, Mudrex and CoinSwitch, are registered with the FIU.

Additionally, the government has extended its watchful eye to digital assets, applying anti-money laundering provisions to the cryptocurrency markets in India.