Fake crypto exchange scam defrauds ₹1000 crore from Indian users

Crypto scammers are using a wide range of techniques, using identity scams and phishing, to lure users into investing through fake crypto exchanges. Such scams, which have spread through social media portals, have caused users in India to lose as much as ₹1,000 crore, according to a report by Indian cyber security firm, CloudSEK.

According to the report, the scam involves creation of fake crypto exchanges that resemble legitimate trading platforms. The scammers subsequently reach out to users, and offer a $100 credit note as a welcome offer on the platform. Such offers are even credited to users to gain trust, who subsequently add funds to the platform after making profits.

According to Rahul Sasi, chief executive of CloudSEK, all trading and withdrawal facilities of the fraud platform were subsequently disabled, after users added their own funds.

To be sure, such crypto scams are not novel. On May 27, Mumbai Police authorities in the Kandivali West area of the city arrested undergraduate student, Jagdish Ladi, for cumulative crypto scams amounting to over ₹1.5 crore. The latter, according to a report by The Indian Express, promised a number of users returns to the scale of 25% – but failed to deliver.

Shortly thereafter, on May 29, a Hindustan Times report said that a fraud crypto exchange, which too was impersonating a legitimate site, stole ₹1.57 crore from an individual based in Malabar Hill, Mumbai. The service worked in an identical way as detailed by CloudSEK in its latest report – first gaining user trust over a period of months, and subsequently freezing all withdrawal facilities once the victim added their own funds.

Such scams are not restricted to India, either. Last week, on June 17, Sean Regan, an agent of USA’s Federal Bureau of Investigation, told CNBC that a host of crypto scammers have taken to Linkedin, the Microsoft-owned social network for professionals, to dupe them with similar scams.

According to Regan, the scammers gained a user’s trust over months by offering them strategies to trade on legitimate crypto platforms, and after a period of time, convincing them to switch to a new platform, which would be fake. Regan affirmed that the volume of such frauds is “significant”, and added that users have lost as much as ₹12.5 crore ($1.6 million) per person to such scams.

Linkedin, according to CNBC, acknowledged the rise in the number of such scams, adding that it uses a wide range of screening techniques to block out such users from the platform. It added that over 32 million such fake accounts were blocked from the platform in 2021.