Indian authorities have arrested five individuals accused of orchestrating a cryptocurrency scam that defrauded a businessman of nearly $700,000 through a fraudulent trading platform.
According to local reports, the suspects, including one woman, were apprehended following an investigation by the cybercrime division of Odisha’s Crime Branch. The scam revolved around a fake crypto trading app called ZAIF, which falsely promised investors up to 200% returns. The fraudsters marketed the platform as a Japan-based exchange, borrowing the name of a legitimate Japanese crypto exchange that suffered a $60 million hack in 2022. However, there appears to be no connection between the exchange and the fraudulent scheme.
The scheme began when the victim, an Indian businessman, was contacted on Facebook by a woman posing as a Hong Kong-based IBM software developer. She gained his trust and persuaded him to invest through the fake ZAIF platform. Over a month, he transferred more than INR 6 crore (approximately $699,352) across multiple accounts controlled by the fraudsters.
To build credibility, scammers create fake profits on a platform. When a businessman tried to withdraw his earnings, he was asked to deposit an additional INR 89 lakh to access the funds, a tactic common in advance fee scams. Upon refusing, the fraudsters severed contact. Investigators tracked the suspects using digital footprints and financial transactions, leading to their arrests and confiscating evidence during a raid.
India is facing ongoing issues with crypto-related fraud due to the lack of regulation in digital assets. A scam involving a fake token called RSN was recently uncovered, promising investors 2% daily returns. Investigations showed that investor funds were quickly converted into Tether (USDT) via major exchanges like Binance, resulting in losses between $1.14 million and $2.29 million. Police have arrested three suspects who admitted to manipulating cryptocurrency values and coercing investments, while another key suspect, believed to be the mastermind, is still at large.
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