Virtual currency fraud to fore, mastermind held

LUCKNOW: Two days after the Reserve Bank of India (RBI) cautioned users, holders and traders of virtual currencies (VCs) including bitcoins, the UP Special Task Force (STF) unearthed a first of its kind bitcoins exchange fraud in Lucknow. The team arrested the mastermind behind the Allahabad-based racket from Charbagh here on Thursday.

Triveni Singh, ASP, STF, said the accused was identified as Mohd Azhad alias Ashraf of Dhoomanganj, Allahabad. Some more people were involved in the racket and their arrests were likely after information about them was extracted from the mastermind, he said.

He said the fraud came to light after an NCR-based Haryana businessman, Pankaj Garg complained to the STF’s cyber crime cell a few days ago.

Explaining the modus operandi, the ASP said the fraudsters basically created a user ID on different virtual currency exchange websites and put bitcoins on sale. They first lured traders to purchase the bitcoins at low prices and even transferred some into their e-wallets to win their trust.

“After this, the fraudsters got the original currency transferred into their bank accounts, opened on forged identities, when the traders demanded bigger amount

of bitcoins,” he said, adding, “Thereafter they disappear after withdrawing money from their bank account.”

He said the RBI had issued guidelines about bitcoins many times but recently a revised advisory was issued regarding it on December 5, 2017. The advisory cautioned users, holders and traders of virtual currencies (VCs), including bitcoins, regarding

the potential financial, operational, legal and security related risks associated in dealing with it.

In wake of significant spurt in the valuation of many VCs and rapid growth in initial coin offerings (ICOs), the RBI advisory also clarified that it had not given any licence/authorisation to any entity/company to operate such schemes or deal with bitcoin or any virtual currency.