$14 Million Crypto Scam Leads to 4 Arrests in India

Four individuals have been arrested in the west Indian city of Surat in connection with an alleged cryptocurrency scam that is responsible for the theft of the equivalent of at least $14.2 million, according to a report from the Times of India. The same report said that the stolen amount is actually likely to be much higher than the reported figure.

The four individuals--two residents of Mehsana, a resident of Palanpur, and a resident of Bharuch, are alleged promoters of “KBC Coin,” a cryptocurrency that was allegedly backed by gold. Two more individuals who were responsible for promoting the coin--a resident of Mumbai and a resident of Surat--are currently on the run from law enforcement agents.

बिटकॉइन और क्रिप्टो कोइन के हब माने जाने वाले सूरत में और मामला दर्ज;केबीसी कोइनके नाम से 1.26 करोड़की धोखाधड़ी की,सीआईडी क्राइमने तीन लोगों को गिरफ्तार किया। #CID #BitCoin #CryptoCurrency @bhatia_CID @hareshdudhat #CryptoCurrencyNews #Surat #BitaCoinNews @GujaratPolice pic.twitter.com/bcEwLmebwE

— Journalist पत्रकार તેજશ મોદી तेजश मोदी Tejash Modi (@TejashModiLive) July 4, 2019

6 Months After the Network Launched, Promoters Disappeared

The network was originally advertised roughly two years ago by Baljeetsingh Lashkariya, one of the individuals who is currently running from police. During the year and a half period between then and the launch of KBC Coin’s network, Lashkariya reportedly tricked “thousands of people” into investing in the project.

And the investors that the project may have been targeting low-income individuals as well as high-volume investors. According to the Times of India, the project advertised that investors’ 10 paise coins (worth $0.0015) would grow into 10 Indian Rupees (worth $0.15--a 1000% increase) in “no time.” Ten paise was the purchasing price for one KBC Coin when the project was launched.

However, six months after the launch of the project, “the value of KBC coins never increased… [and] the promoters went underground,” explained Ashish Bhatia, Director General of Police in India’s Criminal Investigation Department. It’s unclear whether this was always part of the plan, or if the promoters split the scene after it became clear that their promises were impossible to fulfill.

The $14.2 million that has been reported missing so far were reported in a complaint by Surat resident Rajesh Maniya, who says that he himself along with his friends and relatives invested that amount of money in the project.

The KBC Coin case represents the sixth registered instance of cryptocurrency fraud that has taken place in Surat over the last two years.

Most recently, Indian police uncovered a multimillion-dollar scam involving Divyesh Darji, a former BitConnect promoter, in early June. Finance Magnates previously reported that Darji had already been arrested in August of last year in connection with his relationship to BitConnect.