On Sunday Indian police stopped a very elaborate scam involving $2,6 million and a pair of semi-competent masterminds.
Police in Delhi arrested two men in connection with a Ponzi scheme that managed to deceive 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.
According to the officer, some of the people who invested actually received returns from the whole ordeal, getting Bitcoins in the process.
When 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 found 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 (about $52 000) in the scheme.
BMP was eventually found to have absolutely no value. 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 in the investigation.
A similar pyramid scheme was recently stopped in China, where the people involved promised investors returns of up to 80 000 yuan (about $13 000) per day.
But this time around, the schemers were more intelligent, promising returns of 12% over an 18-month period, a more believable pitch.
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.
