The mastermind behind a cryptocurrency rug-Pull that may have defrauded thousands of individuals across Himachal Pradesh of over Rs 200 crore since 2018 remains elusive, despite ongoing police efforts. The fraudulent gang enticed people with promises of quick and substantial returns on crypto investments, establishing a network of investors. The initial investors were then incentivized to recruit others, resembling a Ponzi-style scheme.
The issue gained attention in the Vidhan Sabha when Independent MLA Hoshyar Singh raised concerns, estimating the swindled amount in Kangra and Hamirpur alone to be upwards of Rs 200 crore. Subsequently, a special investigation team (SIT) was formed to probe the matter. The exact amount defrauded is yet to be determined, as stated by Deputy Inspector General of Police, Abhishek Dhullar, who leads the SIT.
The fraudsters employed a combination of misinformation, deception, and threats to control their scheme, manipulating coin prices to extract money from unsuspecting investors. Their first coin, ‘Korvio Coin’ or KRO coins, involved an initial activation fee and promises of substantial returns. Over a five-year period, the frauds operated with three to four cryptocurrencies.
Using a Ponzi scheme pattern, investors were encouraged to recruit new members, creating a cycle where new investments funded returns to earlier investors. The scammers built fake websites to list their coins and manipulated prices. The introduction of ‘DGT Coin’ saw a deliberate decrease in price after a significant number of purchases, resulting in a massive rug-pull.
The accused continued their operations under different company names, launching new coins and investment plans, such as ‘Hypenext’ and ‘Aglobal.’ Police received 50 complaints about such frauds in the current year alone. Investigation revealed similar modus operandi and common names across these frauds, leading to the arrest and chargesheeting of five individuals, with eight FIRs filed.
Director General of Police Sanjay Kundu expressed confidence in closing in on the cryptocurrency scam kingpins in Himachal Pradesh, citing ongoing financial investigations and asset mapping.
The elaborate cryptocurrency scam that unfolded in Himachal Pradesh involved a highly organized and deceptive operation that exploited the vulnerability and greed of unsuspecting investors. Here are more details about the intricate scheme:
The Initial Pitch
The fraudulent gang strategically entered the scene in 2018 when cryptocurrency fever was at its peak. Leveraging the allure of quick and substantial returns, they lured individuals into their network with promises of financial prosperity through crypto investments. The initial pitch revolved around the creation of a network of investors, enticing the first wave of participants with the potential for lucrative gains.
Ponzi-Style Recruitment
A hallmark of the scam was its Ponzi-style recruitment strategy. Initial investors, eager to capitalize on the promised returns, were incentivized to bring in new members. This created a self-sustaining cycle where funds from new investments were utilized to pay returns to earlier investors. The early participants, reaping significant returns, unwittingly became ambassadors for the fraudulent scheme, further fueling its growth.
Manipulation of Cryptocurrencies
The criminals strategically launched their first coin, ‘Korvio Coin’ or KRO coins, charging buyers an initial activation fee while making grand promises of substantial returns. Over a five-year span, they operated with three to four cryptocurrencies, each introduced with the allure of new investment opportunities. The modus operandi involved the manipulation of coin prices through misinformation, deception, and threats, allowing them to maintain control over their scheme.
Creation of Fake Websites
To legitimize their operations, the scammers went to great lengths to create fake websites that listed their coins. These websites served as the façade behind which the fraudulent activities were conducted, allowing them to attract more investors. The manipulation of coin prices on these platforms played a crucial role in the success of their deceitful endeavors.
‘DGT Coin’ and the Massive Rug-Pull
As the scheme progressed, the fraudsters launched a new coin, ‘DGT Coin.’ Once a significant number of people had invested at a higher rate, they deliberately brought down the price, resulting in a massive rug-pull. This strategic move left investors with worthless tokens and led to a cascade of financial losses.
Expansion Under Different Company Names
To evade detection and prolong their fraudulent activities, the accused introduced new coins and investment plans under different company names, such as ‘Hypenext’ and ‘Aglobal.’ Each iteration was presented as a fresh opportunity for investment, keeping the scheme alive and growing.
Ongoing Investigations and Arrests
In response to growing concerns and the efforts of Independent MLA Hoshyar Singh, a special investigation team (SIT) was formed. The SIT, led by Deputy Inspector General of Police Abhishek Dhullar, has made progress in the case, resulting in the arrest and chargesheeting of five individuals. The investigations are ongoing, with a focus on mapping the assets of the cryptocurrency scam kingpins.
A Call for Regulatory Measures
The Himachal Pradesh cryptocurrency scam, with over 50 complaints reported in the current year alone, highlights the urgent need for regulatory measures in the cryptocurrency space. As law enforcement agencies work tirelessly to apprehend the masterminds, there is a growing consensus on the necessity of clear guidelines and frameworks to safeguard investors and curb fraudulent activities in the decentralized finance sector.