India's Enforcement Directorate (ED) has carried out coordinated raids at 21 different locations in Karnataka, Maharashtra, and Delhi as part of an expanding investigation related to a large-scale cryptocurrency fraud that is said to have operated for nearly a decade.
Searches were conducted on December 18 under the Prevention of Money Laundering Act (PMLA). The targets were the residential and office spaces of 4th Bloc Consultants and its partners.
India's largest cryptocurrency crackdown to date?
Authorities state that the group operated fake cryptocurrency investment platforms that defrauded both Indian and foreign investors by promising exceptionally high returns.
According to ED, the case originated from a police crime report and inquiries made by the Karnataka State Police.
Researchers suspect that the perpetrators created professional-looking websites that closely resembled genuine international cryptocurrency trading platforms. The sites had dashboards, balances, and transaction histories.
However, these platforms were largely just a facade. According to authorities, there was very little or no real trading.
Instead, crypto fraudsters operated investors' funds in a structure resembling a traditional Ponzi or multi-level marketing system.
To increase reliability, the perpetrators exploited photos of well-known crypto investors and public figures without permission.
Small returns were paid to early investors to build trust. Later, they were encouraged to invest larger sums and recruit new participants with referral bonuses.
As the system expanded, promoters used a lot of social media, such as Facebook, Instagram, WhatsApp, and Telegram, to reach victims.
ED estimates that the network targeted investors in India and abroad.
According to researchers, the criminal proceeds were transferred through complex cryptocurrency wallets, secret foreign bank accounts, shell companies, and hawala channels.
The perpetrators also transferred money through peer-to-peer cryptocurrency transfers before it was converted to cash or transferred to bank accounts.
During the raids, ED found several cryptocurrency wallet addresses allegedly under the control of the accused, as well as movable and immovable assets that had been acquired in India and abroad with illegal funds.
Authorities also uncovered several foreign companies that were used to conceal the flow of funds.
In particular, authorities believe that the operation began at least in 2015. The fraudsters developed the system over the years to avoid detection as the oversight of cryptocurrency markets tightened.
The investigation is still ongoing.