A confusing regulatory scenario for cryptocurrencies has prevailed for years now, leading to the emergence of nefarious use cases for crypto
From Ponzi schemes that lure investors by promoting cryptocurrency to fake coins and promises of higher returns on investment, the Indian market has seen all kinds of scams lately
The Bitcoin bull run has brought many enthusiasts to the cryptocurrency fold lately
Temporary blips and price corrections aside, the Bitcoin bull run has endured this year, with the price of the leading cryptocurrency hovering above the $19,000 mark, as of December 15, 2020. That’s a gain of 60% from late-August when Bitcoin was trading at around $11,767.
Indian crypto stakeholders have been raving about the emergence of Bitcoin as a new asset class since it has fetched returns of nearly 160% since April, as opposed to 30% for gold, the latter also proving an expensive investment for young working professionals in India. Some of the country’s leading crypto exchanges such as WazirX and CoinDCX are reporting buoyant market sentiment, resulting in an enhanced user base.
However, a confusing regulatory scenario for cryptocurrencies has prevailed for years now, leading to the emergence of nefarious use cases for crypto. A lot of these are Ponzi schemes, luring investors by talking up a new cryptocurrency that could fetch higher returns on investment than mutual funds or the more conventional investment instruments. Eventually, these schemes go bust, robbing investors of their hard-earned money.
Other types of crypto scams range from fake crypto wallets to fake altcoins. In the latter, cryptocurrencies other than Bitcoin are made available at certain exchanges at attractive prices.
Those who find bitcoin and the popular cryptocurrencies expensive are drawn to these altcoins, only to find that the new coin isn’t a genuine cryptocurrency, something that’s sooner than later discovered by the relevant authorities. Such fake coins are routinely removed from circulation. However, by the time that happens, millions of dollars worth such fake coins have already been sold to users.
The easiest way to identify a crypto scam is to realise when “offers” and “assured interest returns” on an unheard-of cryptocurrency sound too good to be true.
An overview of the modus operandi of the various types of crypto scams was given in an Inc42 article, Crypto Ban In The Air, Crypto Scams Everywhere.
With the recent case of a Gujarat cryptocurrency trader arrested in connection to a money-laundering probe related to an online betting racket, we look at the most notable crypto scams to have emerged out of India in the last few years.
Crypto Used In Online Betting Racket With Chinese Operators
The arrested person, a resident of Bhavnagar in Gujarat, was found to have purchased Tether or USDT cryptocurrency on behalf of one of the accused companies and transferred them to unknown wallets on foreign exchanges. The police allege that the…