Police bust an alleged ₹5 billion cryptocurrency scam in India

• Authorities in the Indian city of Thane raided the offices of the Money Trade Coin (MTC) on Monday.
• MTC advertises itself as a ‘safer’ and ‘superior alternative’ of storing wealth.
  
• But, to the contrary, complaints have surfaced about MTC being a front for international fraud.

When 2,500 people invest in a supposed cryptocurrency and in turn lose anywhere between ₹3 billion ($45 million) to ₹5 billion ($74 million), one can’t help but wonder whether or not the regulation would be a boon. But what it surely will do is provide clarity between legit ventures and fraudulent ones.

Cryptocurrencies have never been considered to be a ‘stable’ financial asset, but add fraud into the mix and things can get really complicated. And, that’s exactly what happened in Thane, a city that lies on the periphery of Mumbai in the state of Maharashtra.

The cryptocurrency racket

Amit Lakhanpal, in collusion with four other people, launched a cryptocurrency called Money Trade Coin (MTC) at an Initial Coin Offering (ICO) in Dubai. An ICO, in its essence, is similar to an Initial Public Offering (IPO) when a company goes public.

MTC was initially valued at $3 (₹200) when it launched in 2017 with Lakhanpal allegedly promising investors a 20-fold return on their buy-in within six months according to Param Bir Singh, the police commissioner in Thane.

Soon enough, he raised the value of MTC to $6,000 (₹401,472). Cumulatively, with 2,500 people in the mix, that amounts to ₹5 billion. But, there was no way for them to sell any of the cryptocurrency or even make limited withdrawals.

So, basically, people made an investment but couldn’t get to their returns, or even the principal amount.

In fact, the scam only caught the attention of the authorities when a businessman and his colleagues finally complained that they could no longer get a response from the company with respect to their investments.

According to the police, it was easy for Lakhanpal to get away with the scheme due to the portfolio he had created for himself, including a fake degree from an international university. Apparently, he launched a magazine that highlighted ‘inspirational quotes’ and images of famous celebrities as well as a book on cryptocurrency, which added to his profile.

The Reserve Bank of India (RBI) may be imposing a blanket ban on cryptocurrency exchanges, but that doesn’t necessarily mean that the people won’t participate if the opportunity were to present itself. That being said, the uncertainty and lack of clarity on where the government of India stands on the issue creates a problem.

It’s not about whether to invest or not, but rather about whether or not it will create more of a controversy if its reported, for the victims.