Indian police crack down on $200,000 ‘Max Crypto’ ponzi scheme

A resident of Mangalore, Karnataka, has been arrested for defrauding over 50 people in a cryptocurrency ponzi scheme.

According to a local report, law enforcement in Hyderabad has arrested Kunjathbail Mujib Sayyad for operating the “Max Crypto trading” ponzi.

The investigation was originally initiated in late 2022. Back then, victims alleged that Sayyad, along with other accomplices, promised lucrative returns on investments.

The scam operated via an Android application dubbed the MAX App. The scheme promised returns within 150 days from investment.

Users were also offered a two percent commission for every new investor they brought in. The commission would be higher for bigger numbers.

Owners of the scheme claimed to be connected with big cryptocurrency traders. Further, they misled investors, stating that they were headquartered in Ajman in the United Arab Emirates. 

The group held local events to promote their scheme. However, the scam operated completely online, without having any physical offices in India.

According to the victims, the scheme initially paid out returns in U.S. dollars. This is a common tactic leveraged by fraudsters to gain credibility.

The scam managed to draw in small-time investors and daily wagers hoping to see their investments multiply. However, the company, along with its app, disappeared within the first 50 days of launch.

In total, the scheme managed to accumulate INR 1.66 crore, worth approximately $200,000, from 52 victims. 

The case was originally registered by local police after multiple complaints and was later directed towards the Economic Offences Wing of the Cyberabad police.

Sayyad is currently facing charges under Section 420 of the Indian Penal Code for cheating and dishonestly inducing the delivery of property.  Additionally, he is charged under Section 406 for criminal breach of trust, which involves misappropriating property entrusted to him, along with charges under Section 120B for being part of a criminal conspiracy.

His accomplices remain at large at the time of writing.

Scams of these sorts are quite common in developing nations like India. Scammers tend to leverage the general populace’s lack of understanding and the hype around cryptocurrencies.

Earlier this month, India’s Enforcement Directorate (ED) froze the $180 million worth of assets from an investment group alleged to be a similar Ponzi scheme.

Prior to that, the watchdog filed charges against 299 entities for operating a fraudulent scheme operating as a cryptocurrency mining investment firm.