A very elaborate scam involving $2.6 million and a pair of semi-competent masterminds was stopped by Indian police on Sunday.
Police in Delhi arrested two men in connection with a Ponzi scheme that managed to hoodwink 5,000 people into investing large sums of money.
“Their basic idea was to kickstart a multi level marketing scheme involving Bitcoins. The people were given monthly payouts and an additional income for referring the scheme to more people,” said an officer involved in the investigation.
Some of the people who invested actually did receive returns from the whole ordeal, getting their hands on Bitcoins in the process, according to the officer.
Where things got sour
Once enough investors were pulled into the project, the “company” chose to turn off the Bitcoin faucets. Deepak Jangra—one of the two men behind the scheme—then switched tactics and created a new “cryptocurrency” called BMP, supposedly created by him.
After this, he needed a talented partner who can give the project some steam through marketing. He found this person in Deepak Malhotra, a man who was willing to hold legitimate-looking conferences and arrange lavish parties for investors in fancy hotels.
Not a lot of time had passed before they already had a headquarters in northwest Delhi.
The story gained publicity after reports appeared of a woman who invested 3.5 million rupees (~$52,000) in the scheme.
BMP was eventually found to have absolutely no value except the hot air that the pair blew at their crowds while marketing their coin. It was around this time that they started to ask their investors to make their payments in cash.
“Jangra had planned to shift his investors to his own cryptocurrency after getting a good sum of investment, but rising debt and the daily pressure from his investors made him flee with the money,” said another police officer involved with the case.
A similar pyramid scheme was recently stopped in China, where the people involved promised investors returns of up to 80,000 yuan ($12,600) per day.
This time around, the schemers were more intelligent, promising returns of 12% over an 18-month period, a more believable pitch..
The website
Jangra and Malhotra ran their entire operation on a website called Bitmineplus.org.
To a layperson, it looks very legitimate, especially with its UK address, official emails, and smooth-looking front end.
However, once in the About Us section, something seems a bit off:
“Bitmineplus is a unique service that allows you to immediately profit from your dormant Bitcoin. It takes just seconds to transfer your Bitcoin from your wallet to your Bitmineplus saving [sic] account and you will immediately begin to receive daily interest payments.”
So, how do they make the money to pay them over interest? There is no explanation except for the fact that they “use sophisticated algorithms to calculate your payments based upon the amount and duration of your deposit.”
The FAQ page is a copy/paste operation of some of Bitcoin.org’s page, selecting only a few questions and pasting the first paragraph of each answer.
Although this may activate alarm bells in some people’s heads, those with little experience against scams are completely disarmed against such sites.
This scam is over, but as cryptocurrencies become a hotter topic, others will appear. Educating people about them and providing a hotline for people who wish to report them might be the best combined weapon against future Ponzi schemes.
This article appeared first on Cryptovest
