The flip side of rapid digitalisation

New Delhi: There is a growing apprehension among the financial experts and authorities in India regarding the potential escalation of online investment scams and Ponzi schemes in 2024.

The rapid digitization of financial services, coupled with the increasing participation of Indian investors in online trading, has created an environment ripe for exploitation by fraudsters. In recent times, the country has witnessed a surge in reported cases of online investment scams, with criminals employing increasingly sophisticated tactics to dupe unsuspecting individuals.

Cryptocurrency-related Ponzi schemes, promising astronomical returns, have gained traction, especially among novice investors who are eager to capitalise on the digital currency boom. The lure of quick profits has become a common tactic employed by fraudsters to trap unsuspecting victims in elaborate financial scams.

Financial experts are stressing the need for increased awareness and caution among investors. With the economic landscape in India marked by uncertainty and volatility, individuals seeking alternative sources of income may become susceptible to fraudulent schemes that promise guaranteed returns. Hackers have now even opened several anonymous accounts on Binance, the world’s largest cryptocurrency exchange, enabling them to convert the stolen funds and obscure the money trail.

Recently, the Delhi Police have registered an FIR after a man was duped by cyber thugs sitting abroad to the tune of Rs 83 lakh through ‘Binance Wallet’. The cyber thugs had lured the victim on the pretext of investment in crypto trading.

According to the FIR accessed by IANS, Samir Gupta (56), a resident of Munirka Vihar, recently fell victim to online cybercrime/fraud. The perpetrators lured him into investing money in crypto trading by offering expert analyst advice through online chats on popular social media platforms WhatsApp and Telegram. They further asked him to transfer their commission through his Binance wallet.

Gupta stated in the FIR: “In February 2023, I was added to a WhatsApp group named ‘CAE BTC Short Term Trade 213’ by someone. The group claimed to support trade crypto with the help of analysts. They urged me to register on the exchange called CAE based in Malaysia, and I received an invitation to register on their website 5cae.com. I followed their instructions, registered on 5cae.com, and started trading with small amounts, making payments through the UPI provided by them.”

“I made some profits and successfully withdrew funds online, confirming that the exchange was legitimate. They then introduced me to their program called 1V1 and asked me to invest USD 10,000 in a trading account, promising profits of USD 200,000, with any losses to be compensated by the analyst,” Gupta said in the FIR.

“In March, due to my work commitments, I asked the analyst assistant Jenny to add my wife, Sajla Gupta, to the WhatsApp group. Sajla Gupta created her account on 5cae.com and started trading, making small profits and withdrawing money from the trade account online. We deposited USD 10,000 into the exchange account using UPI, with the help of some friends,” he further stated.

“When we were ready with the funds, they presented us with a contract which we signed and uploaded to the exchange site. After that, they removed us from the WhatsApp group and added us to a Telegram group with the analyst Rosen. While trading and making profits, they asked us to separately deposit/transfer 20 per cent of the profit amount as commission. They instructed us to use the Binance App to buy dollars and withdraw to their digital wallet. Therefore, we created Binance accounts for both myself and my wife and transferred the commission for the first day through Binance App. The second day’s profit and 20 per cent commission were also paid through Binance.”

“On the third day of trading, there was a huge loss, and our account almost emptied. Rosen, the analyst, stopped the trade and assured us they would replenish the account to cover the losses. Indeed, within four hours, they replenished our trading account with the complete loss made in the morning trade,” said the FIR. “The analyst resumed trading, and this time, huge profits were made. We were asked to pay a 20 per cent commission on these profits, which amounted to a significant sum. Nevertheless, we paid the commission and continued trading as the program was for seven days. On the last day, we made substantial profits, and the 20 per cent commission worked out to almost USD 30,250. They instructed us to pay this amount, stating that the contract would be completed, and we could withdraw our profits, which we did through Binance,” it read.

“However, on the next day, when we tried to withdraw from our account, the withdrawal failed. Assistant Jenny told us to contact the exchange’s customer support. When we reached out to the agent over Telegram, they asked me to pay a transaction advance tax of five per cent of the total asset value, approximately Rs18 lakh, which I did not pay. I also requested a refund of our invested money, but they denied it. It was then I realized that I had been tricked and had become a victim of cybercrime,” the FIR concluded.

Last year, in a massive crackdown against organised cyber financial crimes, the Central Bureau of Investigation (CBI) under its operation Chakra-II, unearthed an international fraud worth over hundreds crores and a cyber enabled impersonation fraud. After carrying out a detailed analysis of the complex web of money trail, CBI recently conducted raids at the locations of the suspects. The CBI identified 137 shell companies engaged in fraudulent activities.