Indian police crack down on $200,000 ‘Max Crypto’ ponzi scheme

by

As an analyst with extensive experience in financial crimes and fraud investigation in India, I find this case particularly alarming. The arrest of Kunjathbail Mujib Sayyad in Hyderabad for his involvement in the “Max Crypto trading” ponzi scheme is a stark reminder of how scammers continue to exploit the lack of understanding and hype around cryptocurrencies among the general population, especially in developing nations like India.

As a researcher studying financial crimes in India, I came across a recent development where an individual from Mangalore, Karnataka, was apprehended by authorities for allegedly swindling more than fifty unsuspecting victims through a cryptocurrency Ponzi scheme.

Based on a recent news article, authorities in Hyderabad have taken Kunjathbail Mujib Sayyad into custody for allegedly running the fraudulent cryptocurrency trading scheme known as “Max Crypto trading.”

As a researcher looking back at this case, I can tell you that I began my investigation towards the end of 2022. At that time, I uncovered reports from victims who claimed they had been approached by Sayyad and others with promises of substantial returns on their investments. The intrigue surrounding this situation deepened when I discovered that the scam was being orchestrated through an Android application called MAX App. This app guaranteed investors a profit within just 150 days after making their investment.

Users could earn a 2% commission for each new investor they referred. The commission rate increased with the number of new investors.

Representatives of the cryptocurrency initiative falsely claimed connections to major industry players. Additionally, they deceived potential investors by asserting a headquarters location in Ajman, United Arab Emirates.

The organization hosted community gatherings to publicize their project. Yet, their deceptive activities were exclusively conducted over the internet, with no tangible presence in India.

Based on the testimonies of the victims, the scam initially dispersed payouts in American dollar currency. This is a prevalent technique employed by swindlers to establish trust and legitimacy.

Small-time investors and those relying on daily wages were lured into investing by the fraudulent scheme, promising substantial returns. Regrettably, both the company and its associated app vanished within the initial 50 days post-launch.

As an analyst, I’d rephrase that as follows: I have calculated that the scam successfully amassed a total of INR 1.66 crores, which is roughly equivalent to $200,000, from a victim pool of 52 individuals.

I initially reported the matter to the local law enforcement due to several concerns raised. Later on, the investigation was handed over to the Economic Offenses Wing within the Cyberabad police force.

Sayyad is presently accused of deceitfully obtaining property from someone through Section 420 of the Indian Penal Code. Furthermore, he is implicated in Section 406 for mishandling property confided in him and misusing it. Additionally, there are allegations against him under Section 120B for involvement in a criminal conspiracy.

His accomplices remain at large at the time of writing.

In countries undergoing development such as India, it’s unfortunately not uncommon for people to encounter scams related to cryptocurrencies. Criminals often prey on the public’s limited knowledge in this area and capitalize on the current buzz surrounding digital currencies.

This month, I discovered that the Indian Enforcement Directorate (ED) seized assets valued at approximately $180 million belonging to an investment group under investigation for suspected involvement in a Ponzi scheme.

Before that incident, the regulatory body brought accusations against 299 suspects for running a deceitful business under the guise of a cryptocurrency mining investment company.

Read More

2024-06-28 11:30