ED has arrested one Abdul Gafoor, a director of a shell company associated with the Morris Coin scam
In January, the ED had seized assets worth INR 36.7 Cr ($5 Mn) from Nishad K, MD, in connection with the crypto scam
The Morris Coin scam has ballooned up to become an INR 1,200 Cr cryptocurrency scam
The Enforcement Directorate (ED) has arrested one of the prime accused in the Morris Coin scam, which has ballooned to a crypto scam worth INR 1,200 Cr, recently.
The arrested suspect, Abdul Gafoor, is a native of Malappuram, and the ED has remanded him in judicial custody by a Prevention of Money Laundering Act (PMLA) court in Kozhikode. The ED will also move court later today, to seek Gafoor’s custody for interrogation, sources cited by Indian Express noted.
Abdul Gafoor is the director of a shell company, Stox Global Brokers, based in Malappuram. The shell company is linked with Morris Coin and had been allegedly taking money from people lured with fake crypto investment offers, and then placing it in shell companies.
Notably, in January, the ED had seized assets worth INR 36.7 Cr ($5 Mn) from Nishad K, MD and his associates under the Prevention of Money Laundering Act (PMLA), 2002 in connection with the INR 1200 Cr (162 Mn) Morris Coin cryptocurrency cheating case.
During the seizure, the cryptocurrencies such as Ethereum (5.92387265), BTC (0.08267646), BNB (5.51232875), YFI (0.023062), VET (4284.4), ADA (226.479601), USDT (35.88576551) total valued at INR 2,06,96,62 were found and all the above cryptocurrencies, purchased out of the proceeds of crime, were converted into INR and attached by the ED.
The ED initiated money laundering investigations on the basis of multiple first information reports (FIRs) registered by the Kerala Police in various districts of the state including Malappuram and Kannur. According to the FIRs, more than 900 investors were duped out of INR 1200 Cr.
The central agency picked up the case after the FIRs and several cases were registered against Nishad and others in Kannur and Malappuram under Section 420 (Cheating) of IPC as well as the Prize Chits and Money Circulation Schemes (Banning) Act.
The crypto scam involved a nonexistent cryptocurrency called Morris Coin. Nishad and his associates conducted a supposed initial coin offering for it and collected money from ‘investors’. These investments were received through various companies owned by Nishad including M/s Long Rich Global, M/s Long Rich Technologies and M/s Morris Trading Solutions.
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The company listed 10 Morris Coins at INR 15,000, with a lock-in period of 30 days. The investors received access to an e-wallet and were assured that the value of the coin will rise shortly.
Crypto Scams On The Rise
According to stockbroker analytics group BrokerChooser, more than 100 Mn people in India have actively or passively invested in crypto, the highest in the world. Among the bigger cases are Amit Bhardwaj-led GainBitcoin scam, The Bitconnect fraud and other crimes involving OneCoin, ATC Coin and more.
While sources in ED earlier told Inc42 that Bhardwaj had access to more than 82,000 bitcoins worth $5 Bn today, the Bitconnect scam might have involved $3-15 Bn.
The GainBitcoin Ponzi scheme has rattled the Indian crypto market and with the death of the main accused Amit Bharadwaj, there is no telling if the victims will get their invested money back.
In February 2022, the Nagpur Police arrested 11 people in connection with a crypto scam that allegedly duped would-be investors out of $5.36 Mn (INR 40 Cr). While the main accused Nishid Wasnik, his wife and two associates were arrested on February 20, 2022, another seven associates were nabbed in Pune the next day.
In a raid, the officials arrested four individuals and seized gold, high-end vehicles worth roughly $134,000 (INR 1 Cr), a laptop, $25,000 in cash, eight cell phones, and a firearm with seven live cartridges on February 20, 2022.
These crypto scams and issues have seen the I-T department start investigating high-value crypto transactions of about 700 investors on grounds of discrepancies.
These individuals, which includes high net worth individuals (HNIs), could face not only the 30% tax due on the transactions but also interest on the tax, and penalty for tax evasion. Most of these individuals/entities have either skipped mention of crypto gains in tax returns or haven’t filed returns at all.
Apart from the HNIs, there are NRIs and startups, the list also includes housewives and students, who have never filed a single tax return before. This does seem like a ruse to evade the tax net.
The huge number of people in India betting on crypto has seen these schemes pop up left, right, and centre, and without a proper framework for cryptocurrencies, looks like, these crypto scams are going to continue appearing, cheating people out of their hard-earned money.