How Retail investors lost crores of rupees in ₹2,000 Crore Cryptocurrency Scam

Over a five-year period beginning in 2018, fraudsters operating in Himachal Pradesh allegedly defrauded numerous cryptocurrency investors of Rs 400 crore, according to preliminary police investigation. This coincided with a rise in the cryptocurrency market. However, this is only the tip of the iceberg.

As the state police’s special investigation team (SIT) dug deeper, the scam was estimated to be worth 2,000 crore. The SIT is now seeking assistance from the ministry of finance’s Financial Intelligence Unit (FIU) and the income tax department in tracing the accused’s financial transactions and assets.

It is also attempting to obtain assistance from other agencies such as SEBI and the RBI, as HT investigates.

The accused, two of whom are now in judicial custody and are thought to be associated with an organised criminal group, launched the so-called cryptocurrency ‘Korvio KRO’ in 2018 and promised people substantial returns in a short period of time by investing in the digital currency.

They used a Ponzi scheme to entice early investors to bring in more participants and encourage further recruitment into the scheme. This was a multi-level marketing (MLM) scheme that spanned Himachal and even further afield. According to the police investigation, lakhs of people invested in the digital currency.

In Himachal alone, over 2.5 lakh IDs were created. Many people made investments using multiple IDs. While some people quit their jobs to become agents in the scheme, others borrowed money to invest in it. High returns enticed people. Five police officers, two of whom worked in the cyber cell, quit their jobs to become agents and enticed a large number of people to double their money. However, as the fraudsters’ network grew, the returns ceased.

When investors asked for their money, the accused enticed them by promising even higher returns in other currencies. While those at the top amassed enormous wealth, those at the bottom lost everything.

The fraud was discovered when Independent MLA Hoshyar Singh, who represents the Dehra assembly segment of Kangra district, raised the issue during the Himachal Pradesh Vidhan Sabha’s monsoon session in September. In response to a question from Singh, deputy chief minister Mukesh Agnihotri stated that in the last two years, the state has received more than 58 complaints of cryptocurrency fraud.

He announced the formation of a SIT led by a deputy inspector general-rank officer to conduct a thorough investigation into the scam.

Subhash Sharma, a Sarkaghat subdivision native who lived in Mandi town, is the racket’s ringleader. He managed to elude the police and is suspected of hiding in a foreign country. Another accused, Abhishek, is also on the run, but is believed to be in India.

Sanjay Kundu, the Director General of Police, has stated that the SIT will arrest him soon. Sukhdev and Hemraj, two of the accomplices, were apprehended from a hideout in Gujarat. Hundreds of other people who worked as agents to attract investors are also being investigated, with more arrests expected soon. The police have received 55 complaints so far.

Cryptocurrency is digital money that does not require the verification of a bank or financial institution and can be used for purchases or as an investment. After that, transactions are verified and recorded on a blockchain, which is an immutable ledger that tracks and records assets and trades.

It only exists in digital form, and while most people use it for online transactions, you can make some physical purchases with it. Unlike traditional money, which is only printed by the government, cryptocurrency is sold by a number of companies.

Cryptocurrencies are fungible, which means their value remains constant whether they are bought, sold, or traded. Although there are no government regulations in the cryptocurrency market, they are taxable assets. Any profit or loss must be reported to the Internal Revenue Service.