While globally, there is news mostly of Bitcoin theft or hack stories, India is rocked with Bitcoin scam stories — stories of fudge and fudgers. Since the arrest of Amit Bhardwaj, a series of Bitcoin fraud stories have been unfurled based on FIRs filed by cryptocurrency investors.
Most of these frauds are related to MLM schemes. Lastest is the Coinx Trading. Hyderabad police team has arrested five fraudsters who have collected $1.43 Mn from over 1200 investors promising huge returns on their investments.
Another case currently unfolding is that of Gujarat Bitcoin Extortion Case which is said to be worth $3-12.7 Bn.
Let’s take a look at this week’s crypto developments:
Coinx Trading: Another Cryptocurrency-Based MLM Scheme Busted In Hyderabad
Conducting a raid at a Secunderabad-based real estate firm, GRM Estates Pvt Ltd, Hyderabad Police team has captured five fraudsters including the mastermind Gardesh Ramesh, founder of the fraud company Coinx Trading, selling cryptocurrency-based Multi-level marketing (MLM) schemes. The police have also seized four sale deed land documents, (purchased by accused persons with the invested amount of the customers), four ATMs, two cars nine mobiles, cash and other properties of total worth $260 K (INR 1.8 Cr).
As per the police report, “The main accused Gardas Ramesh hatched a plan to gain illegal, easy money and started an MLM business in the name of Coinx Trading (Cryptocurrency/Bitcoin) luring the gullible public with a promise of making them rich within a short period with high returns. Gardesh encouraged them to invest money in Coinx Trading which claimed to be registered in the US and the UK.”
Around 1200 customers were so far enrolled as investors in the Coinx Trade business. The investors have already invested around $1.43 Mn (INR 10 Cr) in the MLM scheme.
Gujarat Cryptocurrency Scam: Divyesh Darji of Bitconnect Arrested
After Amit Bhardwaj was arrested and booked as the mastermind in the $300 Mn Bitcoin fraud case, the Gujarat scam — in which 200 Bitcoins (worth a few crores) were reportedly extorted — was busted. However, the fraud is now being reported to be anywhere between $3 Bn and $12.7 Bn.
The main accused in the case — Divyesh Darji, the Asia head of UK-based crypto company Bitconnect — has now been arrested at the Delhi airport. Darji was returning from Dubai. The other accused — Satish Kumbhani, Dhaval Mavani, and Suresh Gorasiya — are yet to be arrested.
Divyesh Darji has been accused of duping invstors of $12.7 Bn through the Bitconnect.in, the Indian division of the UK-based Bitconnect (.com), which was launched right after demonetisation.
According to DGP Ashish Bhatia, CID-Crime, Gujarat, Bitconnect was launched in India in November-December 2016, just after demonetisation was announced. “They launched their own ‘Bitconnect coins’ soon after demonetisation. They promoted the company on social media and by holding gala functions in cities across the world. They lured investors with 60% monthly interest and incentives in the form of ‘referral interest’,” added Bhatia.
Crypto Startup PocketBits, Users Rush In To Help Kerala Flood Victims
Mumbai-based crypto startup PocketBits has come up with a novel way to help in the Kerala flood relief efforts. It has set up a page to assist crypto token holders from around the globe to contribute to the CM’s Distress Relief Fund (CMDRF) and enable the purchase of relief goods for transfer to NGOs. The company has already received donations worth INR 1.55 Lakh.
In an email response to Inc42, PocketBits founder Sohail Merchant said, “We are trying to help the affected by raising funds via cryptocurrencies for mainly two reasons. One, to help Indian users who have cryptocurrency on exchanges and cannot withdraw INR to donate as most Indian exchanges don’t offer functional INR withdrawals, so they can easily contribute towards the efforts. Second, to enable the global crypto community to contribute in the efforts to rehabilitate the Kerala flood victims without worrying about wire charges etc.”
After Launching Loop, Koinex To Other Blockchain Solutions
Besides having launched P2P crypto transaction facilities, Koinex is also exploring other industry-specific blockchain-based solutions. Speaking to Inc42, co-founder Rahul Raj stated, “We recently launched Loop, and we’re also exploring many other blockchain use cases for various industries and sectors. We are open to collaborating with the government or industry players/category leaders to forge alliances and co-develop sophisticated solutions.”
“Since we successfully built an exchange from scratch, we already have a strong understanding about the financial sector and the various blockchains which are integrated in it, but that doesn’t limit us from exploring other sectors such as healthcare, education, governance, real estate, digital media, and so on,” he added.
SEC Rejects Nine Proposals for Bitcoin ETFs
In a setback to crypto enthusiasts, the US Securities and Exchange Commission (SEC) recently rejected applications for nine Bitcoin-based exchange-traded funds (ETF) from three separate companies. ETF provider Direxion had proposed to list and trade five Bitcoin ETFs, while GraniteShares and ProShare presented two each, all of which were rejected by the SEC.
However, the SEC has further stated that it will review its decision of blocking nine Bitcoin-based exchange-traded funds from coming to market, according to letters the SEC posted on its website.
In other news, while Bank of America has filed another patent application for a system that manages cryptocurrency storage in an enterprise environment, is it right to worry about the energy that Bitcoin mining consumes, a The Conversation article raises?