Indian police have arrested four men in connection with a 1 billion-rupee ($14 million) scam centered around a cryptocurrency called Cashcoin. The group, Sanjay Sontakke (44), Rajnikant Kumavat (46), Alpesh Barodia (32), and Kirankumar Panchsara (38), told investors that the value of the token would double in value within two months, whereupon they would receive a payout. In fact, the gang never minted the coin and were operating a Ponzi scheme, allegedly siphoning off the money into different bank accounts.
The Times of India reports that the crime branch (unit XII), the Indian version of the Securities and Exchange Commission, has registered offences of cheating, breach of trust, and criminal conspiracy under the Indian Penal Code and sections the Information Technology Act. Charges in line with the Maharashtra Protection of Interest of Depositors Act and the Chit Funds Act are anticipated to be added as well. Inspector Sunil Jadhav said of the case:
The accused held meetings in Mumbai, Surat and other parts of Gujarat, and lured people into investing their hard-earned money by promising to double it in two months. Initially, the gang repaid a few investors to lure more people in and then defaulted. Their intention was to cheat.
Don’t Shoot the Medium
News of the scam will not help cryptocurrency supporters in the country in their quest to steer ongoing regulatory discussions in a positive direction, although in truth this crime had next to nothing to do with cryptocurrency. The coin itself was never created and the entire scheme was a confidence trick that fooled unsuspecting people into handing over their money on the pretense of getting more back.
Cryptocurrency was the medium chosen for this scam, but it could just as easily have been bananas or bicycles. The aim was to convincingly sell an investment scheme to naïve people, and it worked. This should not count against cryptocurrency as the discussions continue, but sadly it might do.