Police in the western Indian city of Mumbai, which is also known as the financial capital of the country, have arrested four accused in a $ 14 million (Indian Rupees 1 billion) crypto scam. The accused had launched a cryptocurrency named “Cashcoin”, and they have allegedly cheated investors.
The arrest followed investigations into a cryptocurrency racket. The accused had launched Cashcoin a year ago. They had promised very high returns to their investors in the western Indian states of Maharashtra and Gujarat, in addition to investors in the northern Indian state of Uttar Pradesh (UP).
The case involves two activities that are considered illegal in India. One is the charge of cheating investors with promises of skyrocketing returns. They had allegedly promised investors that their money will be double in just two months!
The accused had held meetings in Mumbai, and a few other cities in Gujarat, as an Indian newspaper reports. An investor from Gujarat had filed the original complaint with the police. He alleged that the accused had cheated him of $ 145,000 (Indian Rupees 10.2 million).
Promising the moon to gullible investors backed by a shady project, and defrauding them are illegal acts in India. The country, as well as the states, have laws to protect the interests of investors. Police in Maharashtra will likely invoke these laws during the prosecution.
This is similar to the investigations that the US Securities and Exchange Commission (SEC) is conducting against several crypto start-ups. SEC found that many of these start-ups were selling securities investment contract without following the regulations. SEC also clamped down on crypto scams.
Crypto not allowed in India
The promoters of Cashcoin also violated the restrictions the Indian government has imposed on cryptocurrencies. This is the second aspect of this interesting case.
The Government of India (GoI) and “Reserve Bank of India” (RBI), i.e., the central bank of the country have consistently opposed cryptocurrencies. RBI has issued multiple advisories to the Indian citizens and warned them against investing in cryptocurrencies like Bitcoin.
In February 2018, Mr Arun Jaitley, the Union Finance Minister, GoI, had categorically announced on the floor of the national parliament that GoI will not allow cryptocurrencies. Mr Jaitly had made it clear that GoI will take every possible step to prevent entry of cryptocurrencies in the payment system of the country, while fully embracing the blockchain technology.
India is taking significant steps to tackle corruption, money laundering, and financing of crime since the last four-and-half years. GoI has taken tough steps in this regard, and the country is clearly seeing improved tax and other compliance.
The all-out fight against corruption is important to India for yet another reason. Money laundering funds terrorism in India, and the country has long suffered from this scourge. At the time of writing, the country is mourning the loss of over 40 security forces personnel due to a terrorist attack on February 14th.
The relative anonymity offered by cryptocurrencies increases the risk of money laundering, and GoI is in no mood to give an additional tool to criminals and terrorists. There hasn’t been any protest against the governments’ move to clamp down on cryptocurrencies, which signals that the people are okay with these steps.
The central and state governments have launched a wide crackdown against crypto businesses. Banks have stopped servicing crypto exchanges in the country. Authorities continue to warn investors about risks concerning cryptocurrencies.
In the present case, the police have already made four arrests. They have cast their net wide and made these arrests from three Indian states, namely Maharashtra, Gujarat, and Uttar Pradesh. They are looking for a fifth accused.
Conclusion: Blockchain, and not crypto, is welcome in India!
Central and state governments in India continue to remain bullish on the blockchain technology, while they clamp down on cryptocurrencies. Several Indian states are piloting the blockchain technology. They are considering a wide range of use cases including land records management and other service delivery.