Busted: Indian Police Crush $15 Million Crypto-based Ponzi Scheme, Seize Ethereum Miners
The war against the illicit use of cryptocurrencies by bad actors to perpetrate crime may not come to an end anytime soon. In the latest development, the Indian police force has crackdown a massive MLM operation that generated almost INR 100 crore ($15 million) from gullible crypto greenhorns.
According to local news outlet Times of India, the police in New Delhi have hammered down an illegal Ethereum mining facility in Dehradun, where a gang of criminals has been using to mine the altcoin for quite some time now.
The security forces wouldn’t have discovered the 4,000 square-foot complex even for many years to come, had it not been for the report of the unsuspecting investors who pumped money into the now-defunct pyramid scheme.
The police discovered the mega Ethereum mining rig on April 25, 2018, when they raided the premises in a bid to arrest Kamal Singh, a DU graduate, and Vijay Kumar, an engineer who allegedly swindled many that invested in their multiple virtual currency-based multi-level marketing (MLM) schemes.
In what has been tagged the first-of-its-kind operation by the Delhi police’s Cyber Cell, the accused person’s had allegedly lured hundreds of people to invest in their bitcoin-powered Ponzi operation via their now inoperative sites that generated over Rs 100 crore (roughly $15,000), gainbitcoin.com and bits2btc.com.
End of the Road
During the raid, the police were able to seize 100 units of Ethereum mining equipment, 500 graphics cards, and servers.
Commenting on the case, Delhi Police official, KPS Malhotra said:
“We had already arrested the owners of the mining firm Kamal Singh and Vijay Kumar, 13 days ago. And, based on the further intel, we have now raided their mining firm in Dehradun.”
A Shot in the Foot
The officers in charge of the investigation also discovered that the members of the gang weren’t entirely in cordial terms with themselves, as one of them, SS Alagh wanted to claim full ownership of the facility. The rift resulted in Kumar, the one in charge of the mining operations filing a police report against Alagh.
“Kumar had lodged a complaint with the local police alleging that Alagh and his associates had kidnapped him,” said an officer.
Presently, Kumar and Singh are in custody while Alagh is nowhere to be found and the authorities are investigating whether more mining operations were established by the group.
One Too Many
In 2018 alone there have been quite many cases of busted Ponzi schemes involving cryptos, and this is quite a worrisome phenomenon for the digital currency industry.
Back in April, the Chinese police destroyed a cryptocurrency-based pyramid scheme that generated roughly $13 million from more than 13,000 participants.
Also, on April 4, 2018, BTCManager published a story about a Philippines couple, Arnel and Leonardy Ordonio, who defrauded dozens of people who they deceived into participating in their organized Pyramid scheme.
More Stringent Penalties Necessary
As the value of digital currencies continues to surge, bad actors will keep devising illegal means to rake in cryptocurrencies. Therefore it is crucial for authorities to formulate more capital punishments for crypto-related crimes.
Philippine Senator De Lima, a former justice secretary, also shares this opinion and is now pushing the authorities to pass the Senate Bill (SB) No. 1694, which will see perpetrators of digital currency crimes sentenced to life imprisonment.