Fraudsters in Himachal Pradesh minted a series of crypto coins – two of which were KRO and DGT – to defraud thousands of investors of over Rs 200 crore over a period of five years, starting in 2018 – the year when crypto reached a fever pitch.
The people alleged to be part of a gang lured people who promised them high returns on crypto investments in a short time and created a network of investors.
The initial investors were then tricked into bringing other people into a Ponzi-like scheme.
The matter was raised in the Vidhan Sabha by Independent MLA Hoshyar Singh, who estimated that the amount of money swindled in Kangra and Hamirpur alone was more than Rs. 200 crores.
In the wake of Singh’s speech, a special investigation team was formed to probe the matter.
The exact amount defrauded is yet to be determined, Deputy Inspector General of Police, Northern Range, Abhishek Dhullar, who heads the SIT, told PTI on Monday.
Five people have been arrested in connection with the fraud, but their kingpin is still at large, police said.
The fraudsters used a combination of misinformation, deception and threats to maintain control of their scheme and continued to extract money from unsuspecting investors by manipulating the prices of their coins, he said.
The first coins they launched were ‘Korvio Coin’ or KRO coins.
They charged the buyers an initial activation fee and promised them substantial returns. In their five years of existence, the fraudsters used three to four cryptocurrencies.
Cryptocurrency is a digital currency designed to work as a medium of exchange over a blockchain-based computer network that does not rely on any central authority, such as the government or bank, to maintain or maintain it.
Once their accounts were activated, the investors were encouraged to sign more members to the scheme, police said.
The criminals exploited a Ponzi scheme: a form of investment scam in which returns are paid to previous investors from the capital contributed by new investors, rather than from legitimate profits.
Investors were encouraged to continue recruiting new members, a practice that created a cycle in which money from new investments was used to pay returns to previous investors. These initial investors achieved tremendous returns and became brand ambassadors for the program.
The scammers built fake websites to list their coins and manipulated their prices.
Later they launched a new coin called ‘DGT Coin’. After enough people purchased these coins at a higher price, their price was deliberately lowered, causing a huge back pull.
The suspect introduced new coins and investment plans under different company names, such as ‘Hypenext’ and ‘Aglobal’. Each time a new coin was introduced, it was marketed as a new investment opportunity, police said.
According to police, they have received fifty complaints about such fraud this year alone.
During their investigation, police found that the modus operandi in these frauds was similar and many names were involved, said SP Cyber Crime Rohit Malpani.
Since then, five people have been arrested and charged in connection with this fraud and eight FIRs have been filed, police said.
“We are close to nabbing the kingpins of cryptocurrency scam in Himachal Pradesh and have identified their assets and are conducting financial investigation,” Director General of Police Sanjay Kundu told PTI.
“My advice to people is not to fall prey to the cryptocurrency fraudsters,” he said.
The cryptocurrency market has seen several issues in recent years, including the famous 2021 Squid coin scam where the coin makers reportedly made $23 million (approximately Rs. 190 crore).
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)