Indian Authorities Arrest Crypto Scammers for $700K Fraud Disguised as Japanese Exchange
Indian authorities have arrested five individuals linked to a large-scale crypto fraud that defrauded an unsuspecting businessman of approximately $700,000 (INR 6.16 crore). According to a local report, the scam was orchestrated through a fake trading platform masquerading as a legitimate Japanese cryptocurrency exchange, ZAIF.
Big ROI Lured Indian Businessman
The cybercrime wing of Odisha’s state Crime Branch led the operation, uncovering how the fraudsters lured victims with promises of exorbitant returns on crypto investments. The scheme began in May 2024 when the victim, a businessman from Berhampur, was contacted on Facebook by a woman claiming to be a Hong Kong-based software developer. She introduced him to the bogus trading platform, where he was assured a 200% return on his investment. Once the businessman deposited funds over a month-long period, he was shown fabricated profits to instill confidence. However, when he attempted to withdraw his earnings, he was asked to deposit an additional INR 89 lakh ($107,000) to unlock his funds, a common advance fee fraud tactic. Realizing he had been deceived, the victim reported the fraud to the authorities, leading to a swift investigation and the arrest of the perpetrators in Surat, Gujarat.
The Surge of Crypto Scams in India
This case is one of many crypto-related frauds sweeping across India, a country witnessing a rapid rise in digital asset adoption. Just days before the Odisha bust, authorities in Assam dismantled another scam, the RSN Crypto scheme. This scheme duped over 2,000 investors with promises of 2% daily returns.
Investigators revealed that the culprits swiftly converted investor funds into USDT (Tether) and transferred them via major exchanges such as Binance. While three suspects have been detained, the mastermind remains at large. Similarly, earlier this year, police uncovered the Datameer scam, which defrauded 700 investors out of $114,000. Another major fraud case, the HPZ Token scheme, involved 299 Chinese-linked entities and resulted in multi-million-dollar losses. Given the vulnerabilities within India’s largely unregulated crypto sector, law enforcement agencies are intensifying efforts to curb fraudulent activities. India’s growing fascination with cryptocurrency, especially among young investors seeking alternative income streams, has fueled an increase in both legitimate trading and scams.
Despite the country’s stringent crypto tax policies and regulatory ambiguities, trading volumes on local exchanges surged to $1.9 billion in late 2024. In fact, recent efforts are underway to establish a clear framework, with Coinbase already processing its full return to India.
The GainBitcoin Scam and Continued Crackdowns
The crackdown on crypto scams in India isn’t new. Last month, the Central Bureau of Investigation (CBI) also launched nationwide raids in connection with the infamous GainBitcoin Ponzi scheme, one of the largest crypto frauds in the country’s history.
The scam, which began in 2015, defrauded investors of an estimated $756.48 million (INR 6,600 crore). GainBitcoin was operated by Amit and Ajay Bhardwaj, who lured investors with promises of 10% monthly returns through Bitcoin cloud contracts. However, as with all Ponzi schemes, early investors were paid using new investor funds until the system collapsed after 18 months. Authorities have since seized $2.75 million in crypto assets, multiple wallets, hard drives, and incriminating documents during the raids, with further investigations ongoing. With India’s crypto market nearing $2 billion, regulatory challenges persist. Despite efforts by the government to establish global guidelines during its G20 presidency, tax policies remain unchanged, posing hurdles to mainstream adoption. As it stands now, the Indian authorities are working hard to curb irregularities associated with crypto and establish a clear rule governing its use.