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Gang arrested in India over billion-rupee cryptocurrency fraud

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Four people in the Indian city of Mumbai have been taken into custody following allegations that they defrauded a billion rupees or so out of unsuspecting investors.

The four were taken into custody on Sunday of last week, 17 February. They have been named as Alpesh Barodia, Sanjay Sontakke, Rajnikant Kumavat and Kirankumar Panchsara.

A fifth suspect, known as Ashok Goyal, remains at large. Police are looking to speak to him as a matter of urgency following suggestions that he played a vital part in the alleged fraud.

The full list of crimes which the group are alleged to have carried out include everything from criminal conspiracy to breach of trust.

Other breaches of the Indian Penal Code which they are supposed to have carried out include cheating. They have also allegedly contravened the country’s Information Technology Act.

However, all four are believed to have so far denied the accusations. According to one report, the group claim that because cheques were used for some of the transactions the relevant laws do not apply.

According to industry press, the individuals stand accused of taking part in meetings in various Indian locations, such as Gujarat, Surat and Mumbai.

They supposedly set up their own cryptocurrency scheme, which they called Cash Coin. However, the plan was allegedly to defraud any traders who used the scheme.

According to the press, the gang of four or five told potential investors that they could make twice as much money as they put in.

However, the alleged scam then began to take on some of the hallmarks of a classic Ponzi scheme. A number of traders received payouts, meaning that enough legitimacy had been built up to make the scheme popular.

After that, other investors found that they were not receiving the payouts they expected. Defaults then occurred, and many investors were left with nothing.

One person based in the city of Surat in the west of the country said that the group managed to defraud him of just over 10m rupees in total.

It is claimed that once the defendant became involved in the scheme, his funds were moved from an account based in Surat to another bank account in the state of Uttar Pradesh – which is located far to the north of the country near the border with Nepal.

It is estimated that, in total, the alleged crypto scammers fleeced people out of one billion Indian rupees in total. This is equivalent to just under GBP£11m or USD$14m US dollars at the time of writing.

As a result of the ongoing investigations, police in India have now taken steps to prevent any more funds from being misused.

They have frozen the accounts related to those who have allegedly participated, for example.

India has both a highly technology-oriented workforce but also a high degree of economic inequality, and as a result, it has suffered from problems with cryptocurrency fraud before.

Just last month, for example, police arrested a group of people who were allegedly involved in a 5bn rupee crypto fraud scheme.