The hostility of India’s government towards the crypto industry hasn’t stemmed the growth of scams, and at this point, it’s worth wondering when the government will reach its breaking point. Early on Thursday, news platform Times of India published revealed that India’s Criminal Investigation Department (CID) has successfully apprehended four citizens for masterminding a cryptocurrency Ponzi scheme that defrauded investors.
According to the report, the suspects- named ijay Prajapati, Dhiraj Patel, Kamruddin Syed, and Ashiq Shaikh- were the creators of the KBC Coin, a crypto asset which, so far, hasn’t proved to be worth the name “cryptocurrency” in any way.
The idea behind the KBC Coin was launched by Lashkariya about two years ago. During that time and about six months ago when the coin eventually launched, the promoters had been successful in promoting and luring unsuspecting investors to participate in their scam.
It launched six months ago, but the investors have been made to rue their investments. While no one expected it to drive volumes, since it’s not listed on popular cryptocurrency exchanges, it’s performance has been terrible. KBC Coin had performed so poorly that it’s price has remained stagnant since it launched. Now, that’s some cause for concern.
The publication clarified that at the asset’s launch, a single token was sold for 10 Paisas (around 10 cents to the dollar). The operators allegedly told investors that they would see incredible gains in value, going as far as saying that the token could make an astronomical rise to 10 Rupees.
An anonymous official at the CID revealed that the scam operators invested heavily in marketing. Lashkariya reportedly opened offices in three locations to promote the coin, and the official pointed out another individual named Baljeetsingh Lashkariya, who was responsible for promoting the asset via a pyramid scheme.
In part, the official said, “He promised that the first investor in the chain would get an incentive from the last circle of investors. This offer played a major role in bringing more investors to the company.”
Per the report, Baljeetsingh Lashkariya and a separate promoter named Mohan Patel are still at large. The scam is a blow to the crypto market in India. The country is still battling with the legal status of crypto assets and the legitimacy of Bitcoin Wallets operators and exchanges to operate in the country.
A few months ago, the Reserve Bank of India unveiled a regulatory sandbox, which essentially allows for testing certain technologies and innovations on a small number of consumers over a specified time period. However, while blockchain technology did get included in the sandbox, crypto assets and Initial Coin Offerings (ICOs) were left out.
The Economic Times also reported in April that various departments of the Indian government were considering the imposition of the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” draft bill, which, for all intended purposes, would outrightly ban digital assets in the country.
While many lobbying groups are reportedly advocating for better crypto freedom in the country, the increasing incidence of scams would definitely not help matters. Times of India reported that this is the sixth scam reported in the past 24 months, and if things continue at this pace, an outright ban suddenly seems feasible.