A new minefield: How conmen are cashing in on Delhi’s cryptocurrency craze

Singh is among several people to have been duped by scamsters, who have found a new avenue in cryptocurrency and are using fake virtual currency or apps to con people. As per data from the National Cybercrime Reporting Portal, more than 50 complaints were lodged in Delhi from January to June last year; Delhi reported the second-highest complaints of crypto scams after Maharashtra, where 72 cases were lodged. The unofficial number, though, is likely higher.

Singh said: “I had started working in 2020 and wanted to invest in cryptocurrency. I came across a man on Twitter with a verified ID and lakhs of followers. His scheme seemed genuine as he said he has been investing in cryptocurrencies since 2009 and many celebrities tweeted about him.”

Singh and his friends started investing Rs 5,000- Rs 10,000 per month. Initially, they received some refunds and gifts. Some of Singh’s friends even received phones.

“We were very impressed. We found a scheme where you can spend Rs 25,000 and later receive a Samsung phone. Later, there was an Ethereum scheme where you could purchase coins through his website. I spent over Rs 70,000 hoping for good returns. We then found that we had been cheated — the site was gone, and so was all the money. I was very scared to tell my family because this was my savings. My friends found out that he had cheated over 500 people like this. We kept messaging him, but he never responded…,” said Singh.

According to Delhi Police, several gangs operating fake apps, phishing websites or call centres claiming to deal in cryptocurrency have been busted over the past year.

In the last 12 months, DCP (Cyber Cell) KPS Malhotra said, more than 20 persons were arrested in three cases and Rs 35 crore in assets was frozen by the CyPad team in Delhi. The cheated money is estimated to be to the tune of Rs 200 crore.

Singh said, “They operate through shell companies, fake investment apps, multi-level marketing (MLM) schemes… The accused can be traced once we get complaints, bank transaction details and website information.” But police admitted that arresting the culprits is not always easy as many operate from abroad.

The MO

Just like the stock market, the crypto market has exchanges or brokers that act as facilitators. These exchanges often charge a fee or commission for each transaction. Some even give rewards for hitting a milestone, others offer a joining bonus.
Police said a majority of scamsters use the reward system and promise of high returns to lure investors. They create fake apps in China and invite people in India using social media bulk messaging and marketing to invest.

This was how Priyanka Joshi (27), who runs her father’s clothing store in Ghaziabad, fell prey to such a scam. In 2020, she spotted ads on Facebook about a company called ‘Forex Bitcoin’, which promised 30% returns in less than a year along with other ‘schemes’.

“I asked my friends and they told me it was safe. We were invited to a Telegram group where we could chat with other investors. My father trusted me, and I invested more than Rs 2 lakh in an MLM scheme in a year. They had Google Pay and Paytm gateways, so we thought it was genuine… We also had the option to take out some amount for emergency use. I even pushed my relatives to invest, some of them invested Rs 10,000- Rs 50,000. We were receiving credit coins in our e-wallet and got offers on mobile recharge and electricity bills. We were told we will receive Bitcoin, but in August 2021, the website was gone,” said Joshi.

Her family filed several complaints in Ghaziabad, Delhi, Noida and on the cybercrime portal. “Losing Rs 2 lakh is a lot for us. We needed the money because we had to shut our shop during the lockdown. My father was upset, and my relatives were angry. Nobody helped us. We still try to connect with the admins of the group… hoping to get some of the money back,” said Joshi.

Similarly, Shrikant Kaushik, a trader from Gurgaon, said he lost more than Rs 6 lakh after a group of men convinced him to “invest in cryptocurrency”.

“In 2019-20, I came across several social media influencers promoting an investment scheme. Their profiles were verified, and I was promised an iPhone if I invested in their company. I started giving Rs 2,000-Rs 5,000 a month. I received Rs 500 per month in e-wallets that could be used for mobile and DTH recharge; some investors also received phones. We were then told to buy Ethereum coins using their platform, I bought five for a rate of Rs 50,000 per unit. Soon, I saw posts of other influencers saying the schemes are fake. I was shocked and realised that all my money was gone,” he said.

“My father is a retired official, and I am the breadwinner. I have tried to lodge complaints in Haryana and Delhi but haven’t got an update on the case. I lost a lot of money, and I am still trying to recover it,” he said.

The Indian Express accessed complaints and FIR copies of the three cases and found that no arrests have been made in Kaushik and Singh’s case since the accused are based in China and the US. In Joshi’s case, police have identified the accused and arrested some of his associates, and around Rs 10 lakh in cash has been recovered.

Voicing a note of caution, DCP Malhotra said, “We have advised the public to invest wisely… check websites and accounts and do their research. Most of the accused present rosy pictures and schemes that aren’t valid. One must check for valid schemes and not invest money to get instant returns. There are platforms or exchanges to invest in cryptocurrency that have authentic websites. We also have a helpline to prevent such scams.”

The crackdown

In January last year, 15 persons, including two Chinese women, were arrested for allegedly cheating hundreds of investors. They started two apps, Play Rummy and New World, that were promoted as ‘investment companies’ where users would get instant returns.
The accused would send links on Telegram groups to invite people. Some investors received returns in the first month, but the money soon stopped.

“The accused converted the cheated amount into cryptocurrency and sent it to the kingpins in China. The Chinese nationals then converted the virtual money into other foreign currencies. Since there aren’t strong laws protecting crypto transactions, anyone can convert cryptocurrency,” said an officer.

The two women, Chaohong Deng (27) and Wu Jiazhi (54), were arrested with Rs 4 crore of cheated money while two other Chinese nationals managed to escape.

In a similar case, the Cyber Cell arrested 11 men last June for allegedly cheating more than 5 lakh people of Rs 150 crore using Chinese apps, Powerbank and EZplan. These offered quick returns on investments.

The arrested men claimed the apps were Bengaluru-based start-ups, but all the money was sent to the creators in China and users were blocked after they invested a huge amount. Two of the arrested accused, Avik Kedia and Ronak Bansal, are chartered accountants, police said.

And in January 2021, the Economic Offences Wing arrested a 60-year-old man for allegedly cheating over 50 people by creating a fake cryptocurrency. “Since there’s not much information available about virtual coins, many people invested in the company thinking it would bloom like Bitcoin and Ethereum,” said an officer from the EOW.

The accused, Umesh Verma, was arrested at IGI Airport upon his arrival from Dubai. Verma and his son created a website called Pluto Exchange and started a new “currency” called ‘Coin Zarus’.

“They mostly targeted businessmen in Delhi and assured investors of 20-30% returns on their investment but gave out post-dated cheques,” said the officer. Verma, a jeweller, is still in police custody. His bail was rejected by the High Court.

Last June, Delhi’s Narcotics Control Bureau arrested eight people and seized 22 lakh psychotropic tablets like Tramadol, 60,000 bottles of codeine syrup, and 245 kg of other drugs. Officials said the accused used Darknet to sell the drugs and the operation was being run from Delhi, Uttarakhand, US, and Canada.

“They used cryptocurrency for transactions to evade arrest. They manufactured the drugs in India and sent them as ‘herbal supplements’ to vendors in the UK, US and Canada,” said an officer.