Shimla: A cryptocurrency fraud syndicate has reportedly scammed thousands of individuals across Himachal Pradesh, amassing over Rs 200 crore since the peak of the crypto frenzy in 2018.
Authorities are currently in pursuit of the mastermind behind the scheme.
The criminals employed a method involving enticing promises of high returns on cryptocurrency investments within a short timeframe. They cultivated a network of investors to expand their fraudulent activities. The initial investors were enticed into bringing in more participants, effectively employing a Ponzi-style scheme.
Independent MLA Hoshyar Singh raised this matter in the Vidhan Sabha, estimating that the Kangra and Hamirpur regions alone had witnessed losses exceeding Rs 200 crore.
In response to Singh's assembly speech, a special investigation team (SIT) was assembled to launch a comprehensive inquiry into cryptocurrency fraud. The exact sum defrauded remains undetermined, according to Deputy Inspector General of Police Abhishek Dhullar, who leads the SIT.
The criminals relied on a combination of misinformation, deceit, and intimidation to manipulate coin prices and sustain their scheme.
The illicit scheme began with the launch of 'Korvio Coin' or KRO coins. Investors were required to pay an initial activation fee and were promised substantial returns. Over their five-year operation, the fraudsters introduced and exploited three to four cryptocurrencies.
Cryptocurrency, a digital form of currency functioning through a decentralised blockchain network, does not rely on any central authority, such as a government or bank, for its regulation.
Once investors' accounts were activated, they were encouraged to recruit additional members into the scheme, a classic Ponzi pattern in which returns for earlier investors were funded using capital contributed by new investors instead of legitimate profits.
The scammers set up fraudulent websites to promote their coins and manipulate their prices. Subsequently, they introduced a new cryptocurrency called 'DGT Coin.' After a sufficient number of individuals purchased these coins at higher rates, their prices were deliberately reduced, resulting in a massive rug-pull.
Under various company names like 'Hypenext' and 'Aglobal,' the accused repeatedly launched new coins and investment plans, marketing each as an additional investment opportunity.
In 2023, police received 50 complaints related to such fraudulent activities. Throughout their investigation, police identified commonalities in the method of operation and recurring names linked to the scams, according to SP Cyber Crime Rohit Malpani.
To date, five individuals have been arrested and charged in connection with these schemes, leading to the filing of eight FIRs.
Director General of Police Sanjay Kundu has expressed confidence in closing in on the kingpins behind the cryptocurrency scams in Himachal Pradesh. Financial investigations are ongoing, and assets are being tracked. He advised the public to exercise caution and avoid falling victim to cryptocurrency fraudsters.