The mastermind of the scheme, Gardas Ramesh, has been involved in similar schemes before.
Indian police have arrested five men involved in the Coinx Trading cryptocurrency multi-level marketing (MPM) scheme that defrauded over 1200 investors of around $1.43 million.
According to a report from the Indian news outlet Inc24, the police in Hyderabad raided the premises of a Secunderabad-based real estate firm, GRM Estates, and arrested five people, including the alleged mastermind of the scheme, Gardas Ramesh. The police also confiscated cars, mobile phones, computers, the deeds to real estate the fraudsters had bought with the proceeds from the Ponzi scheme, and other equipment.
The police report, quoted by Inc24, notes that, “The main accused, Gardas Ramesh, hatched a plan to gain illegal easy money, started an MLM business in the name of Coinx Trading (Cryptocurrency/Bitcoin) and luring [sic] the gullible public with a promise of making them rich within a short period with high returns. Gardesh encouraged them to invest money in Coinx Trading, which claimed to be registered in the US and the UK.” The police had estimated that the scheme siphoned off around $1.43 million over a year or so, with Ramesh, who has been involved in similar undertakings before, being the mastermind.
Coinx Trading was claiming to have been established in 2013 and was promising 60% commission for those who brought in new “customers”. The company purportedly was involved in bitcoin trading and was promising spectacular returns on investments in bitcoin and other cryptocurrencies. According to the police, Ramesh, in typical Ponzi-scheme style, was paying off the early investors in order to reel them in and to make them bring more people.
Coinx Trading was offering 12 investment plans, ranging from $100 to $500,000, with varying daily commission, plus some bonuses and a share of the profits for the bigger investors.
Despite the relatively recent ban on crypto trading in India, the country is home to cryptocurrency-related crime of all sorts, including extortion, Ponzi schemes and fake ICOs. Recently, the opposition INC party accused the ruling coalition BJP of covering up an ongoing investigation into a $763 million Bitcoin scam in the western state of Gujarat that involves investor manipulation, businessman abduction and the theft of 200 Bitcoins.