Authorities in India have uncovered a Ponzi scheme involving cryptocurrency that defrauded over 50 people in Mangalore, Karnataka. The mastermind behind the scheme, Kunjathbail Mujib Sayyad, was arrested in Hyderabad for operating the “Max Crypto trading” Ponzi.
The investigation into the scheme began in late 2022 when victims reported that Sayyad and his associates promised high returns on investments. The scam was conducted through an Android application called the MAX App, which guaranteed returns within 150 days of investing. Additionally, users were offered a commission for bringing in new investors, with higher commissions for larger numbers.
The scammers falsely claimed to have connections with prominent cryptocurrency traders and misled investors by stating that their headquarters were in Ajman, United Arab Emirates. Despite holding local events to promote the scheme, the operation was entirely online, with no physical offices in India.
Initially, the scheme paid out returns in U.S. dollars to gain credibility among investors. This tactic attracted small-time investors and daily wage earners looking to increase their investments. However, the company and its app disappeared within 50 days of launch after accumulating approximately $200,000 from 52 victims.
Sayyad is currently facing charges under the Indian Penal Code for cheating, dishonestly inducing property delivery, criminal breach of trust, and being part of a criminal conspiracy. His accomplices are still at large.
Ponzi schemes like this are prevalent in developing countries like India, taking advantage of the public’s limited knowledge about cryptocurrencies. Recently, India’s Enforcement Directorate froze $180 million worth of assets linked to a similar Ponzi scheme, and charged 299 entities for running a fraudulent cryptocurrency mining investment firm.
This case serves as a reminder to exercise caution and due diligence while investing in schemes promising unrealistic returns, especially in the cryptocurrency space. It is crucial to verify the legitimacy of investment opportunities and be wary of schemes that offer high returns with little to no risk. Investors should conduct thorough research and seek advice from financial experts before committing to any investment.