Cyber fraud: 'Minting' money in the name of cryptocurrency | Part 4

(This is the fourth part of a series on cyber frauds. Click to read the first, second and third parts)

Cryptocurrencies that are created using cryptography on a computer network have been around in the world for a few years now. It is a digital currency made using blockchain technology. But, in Kerala, a person who doesn’t have any proof to show that he has had any special technical education after completing class 12 has been ‘minting’ money for a long time by claiming that he has created cryptocurrency!

According to the police, the person has already made Rs 1,650 crore by including lakhs of people in the project. He has been able to do this through just voice messages on social media, without meeting people in person and without even having an office in Kerala. The police are just learning the ‘tricks’ of the scam that was centred in Nilambur, Malappuram, and that promised to multiply investments.

The Pookottumpadam police have registered a case against Nishad, the managing director of Long Rich (LR) Global Private Limited, on the instructions of the Malappuram district police chief, after large financial transactions within a short span of time done by him came to their notice.

This is what the police have found so far about the scam:

* The main promise of the scam was a dividend of Rs 270 per day for 300 days on an investment of Rs 15,000. The number of investors in the scheme increased to lakhs after people calculated that the profits in 300 days would be about Rs 81,000,

* When someone brings others to the scheme, he/she would get a commission of 10% of the investments made by the new investor. They also get commission of 5%, 3% and 1% for every person brought in by these new investors.

* For an investment of Rs 15,000, 10 cryptocurrencies called 'Morris Coins' were issued. According to the scheme, the ‘Morris Coins’ could be sold for cash after receiving the dividends for 300 days. But there was no clarity on how one could sell the coins and where it could be sold.

* The website of the parent company LR Technologies does not have the details about the office of Long Rich Global Private Limited. There is also no phone number listed to contact the company.

* Nishad had said the money received would be invested in industries such as  petroleum, but the police have found no details to show that such investments were made.

* What was happening was completely money chain-style transactions. The money obtained from investors was itself distributed in the form of dividends. Five accounts that had received excessive deposits have been frozen. These five accounts had received Rs 1,200 crore this year. Of this, only about Rs 1.5 crore remains now. The remaining amount was transferred to other accounts.

* Investors are reluctant to file a complaint because they think they will not get the money back even if they file one. They also fear a case could be filed against them for dealing in cryptocurrency and many of them are embarrassed to admit that they have lost money on digital currency.

‘First Indian cryptocurrency developed by a Malayalee’

Nishad launched the ‘Morris Coins’ investment scheme last May claiming it to be the first cryptocurrency developed by an Indian. Until then, he had been running a network business through a learning app called Mojo.

The first suspicion the police had was how Nishad, who had no higher technical education, had created his own cryptocurrency. But none of Nishad's 10 lakh-odd customers asked this question. Investors also did not ask what business Nishad did to be able to pay 540% dividend.

The case has been registered under the Price Chits and Money Circulation Schemes (Banning) Act as there are no complainants. Most of those who are calling up the police with a complaint after coming to know that a case has been registered are recent investors in the scheme. All those who have already made a profit after joining the investment scheme are silent.

New tactics

Nishad's business took a big hit during the lockdown as investments dwindled. He often defaulted on the promised dividends and he then devised various tactics to keep those who came with complaints happy and retain them in his business.

Earlier this month, it was reported that Morris Coin was listed on the US-based cryptocurrency exchange PayBito and that the coin could be transacted through it soon. When the exchange was contacted by e-mail, no information was forthcoming about this cryptocurrency exchange.

‘No big deal’

Many are still calling the Pookottumpadam police station asking: Is it a big deal if a person doing big charitable work commits minor frauds?

An ‘ATM’ for cryptocurrency

Meanwhile, someone started claiming on social media that an ATM has come that allows cash to be withdrawn for Morris coins. The post was accompanied with a picture of the cryptocurrency ‘ATM’, too, and said that the investors would be issued an ATM card. But the police were shocked when they checked the authenticity of the photo. The ATM counter of a private bank in Kochi had been made to look like a ‘Morris Coin’ ATM using Photoshop.

No ban on cryptocurrency dealings

In April 2018, the Reserve Bank of India had issued a circular banning transactions through cryptocurrencies in India. But, earlier this year, the Supreme Court, while hearing a petition against cryptocurrency, had ruled that it cannot be banned in the country. While the RBI ban was removed after the ruling, the government has not yet given legal sanction to cryptocurrency.

The government had announced last year that a legislation would be brought in to regulate digital currency transactions, but it has not yet introduced a bill for this in Parliament.

Why cryptocurrency is not accepted in India

• There are no central authorities to regulate it.

• There is no approved framework for dispute resolution.

• There is no base value for the currency.

• There are concerns that the earnings made through cryptocurrency may be used for illegal activities.

• Cryptocurrency is subject to large price fluctuations.

A washing machine for just Rs 2,050

Fooling people in the name of cryptocurrency can be considered an ingenious idea, but that doesn’t mean age-old tricks are out of fashion.

A lawyer in Ernakulam recently saw an online ad saying a CISF officer who was being transferred from the Kochi International Airport wanted to sell his home appliances at a low price as he wanted to dispose them of before shifting. The lawyer contacted the phone number that was given in the ad.

The person who introduced himself as Manjit Singh posted pictures of the washing machine, fridge, bed and dining table on WhatsApp.

When the lawyer said he would be interested in the washing machine, he was told it would be delivered to his home and that he could make the payment after delivery. He was also told all that he had to pay was only Rs 2,050 for the vehicle that will have to be hired for the home delivery of the washing machine.

The lawyer, however, grew suspicious when he saw Noida mentioned in the details of the account to which the amount was to be transferred. When he called the CISF office, he was told there was no one named Manjit Singh working there!

‘Tourist from Oxford University’ needs visa help

K K Santhosh is a photographer in Changanassery. He recently got a message from someone claiming to be a young woman from England. The message said that ‘she’ is coming to India for sight-seeing and if he could join ‘her’ as a photographer. He was also offered a huge amount for his services. Santosh, however, felt something fishy.

The ‘young woman’ studying in 'Oxford University' and 'living in England' had sent Santosh a friend request through Facebook last July. When he started chatting with ‘her’, ‘she’ revealed her 'desire to visit India'. The daily fee for his services and the vehicle rental were also decided through chat itself.

To convince him that she was genuine, the woman first showed a flight ticket from London to Delhi. She also sent a photo of ‘her’ standing with luggage before leaving for the airport. Santosh said he wanted a photo of her on the plane in the same outfit, but he did not get one.

The next day, the woman got in touch with Santosh for the first time through the phone saying she was at the New Delhi airport and that she required Rs 60,000 for visa on arrival as her credit card had been deactivated.

She said the amount could be transferred to the account of an immigration official and then provided details of an account. When he said he had not have that much money, she asked if he could help with at least Rs 15,000.

Then when Santosh asked for a photo of her standing at the New Delhi airport, he was told that the phone camera was not working. Realising that this was a scam, Santosh blocked the woman from WhatsApp and Facebook and saved his money.

Contributed by: K Jayaprakash Babu, Ajay Ben and Jiku Varghese Jacob.

Complied by: A Jeevan Kumar