‘Notable’ spurt in virtual currency frauds
COMPLAINTS TO UP STF These include passwords of bitcoin wallets being compromised, fraudulent transfer of bitcoins
LUCKNOW: With ‘notable growth’ in the bitcoin market in India over the past few years, there is also an increase in frauds related to the exchange of this virtual currency.
In the last two weeks, multiple complaints have been reported to the UP Special Task Force (STF) by users, mainly traders and businessmen across the state.
The STF had recently unearthed a first of its kind bitcoins exchange fraud when a key operator behind the Allahabadbased racket, Mohd Azhad alias Ashraf was arrested from Charbagh in Lucknow on December 7.
“In the past few months, there has been a spurt in complaints related to bitcoin fraud,” said additional superintendent of police (ASP) Triveni Singh, nodal officer of UP STF cyber crime cell. He said at least six complaints of bitcoin fraud were reported with the cell since December 7.
Singh said cyber fraudsters were taking advantage of the absence of a proper regulatory authority to supervise bitcoin transactions and duping traders and businessmen, who were mainly dealing with virtual currency exchange for larger online transactions.
“In some cases, the passwords of bitcoin wallets have been compromised while in other cases bitcoins were transferred into different e-wallets without original users’ verification,” he emphasised.
One of the complainants from Ghaziabad, Naveen Pandey said he had lost bitcoins worth ₹ 27.9 lakh from his e-wallet. Talking to HT over phone, he said the bitcoins in his e-wallet were transferred to an unknown e-wallet without proper authentication from him on December 3.
He said he first complained to the complaint section of the virtual currency website, but the bitcoins were not retrieved in his e-wallet. He then reported the
matter to the STF cyber cell, seeking their help in tracking the e-wallet in which his bitcoins were transferred.
Initial probe hinted that the password of Pandey’s e-wallet had been compromised to the cyber fraudsters, who got bitcoins from his e-wallet transferred without transaction authentication.
An STF cop said further probe was on but problem were arising as there was no regulatory authority.
Similarly a Jaipur-based trader Raja Tewari was duped of lakhs of rupees through bitcoins exchange fraud in the name of business investment in UP. Tewari told cops that a group of fraudsters lured him into a lucrative business offer and asked him to invest in it. He said the fraudsters took the money from him in the form of bitcoins and disappeared.
“Though we are working on the case, it is a tough task to track such money transactions as there is no authorised agency for its regulation,” said an STF official.
He said fraudsters accepted money in the form of bitcoins and encash them by selling it to other bitcoin users, holders or traders dealing in virtual currency.
In another incident, an NCRbased Haryana businessman, Pankaj Garg was duped of lakhs after being offered bitcoins at low prices. The fraudsters created a user ID on different virtual currency exchange websites and put bitcoins on sale. They first lured traders to purchase bitcoins at low prices and even transferred some into their e-wallets to win their trust.
The fraudsters got the original currency transferred into their bank accounts (opened on forged identities), and when the traders demanded bigger amount of bitcoins they disappeared after withdrawing money from the bank accounts. Increase in bitcoin users Despite RBI guidelines about potential financial, operational, legal and security related risks associated in dealing with bitcoins, there has been a rise in the number of its users and the bitcoin value is reaching an all-time peak. The bitcoin value is expected to touch $ 20,000 mark in the days to come.
Bitcoin is a globally accepted virtual or digital currency that uses rules of cryptography for regulation and generation of units of currency. It falls under the scope of cryptocurrency and its values defer time to time as per their availability and demand.
Bitcoin enables payment in a decentralised peer-to-peer (P2P) network not governed by any central authority or middleman.
Bitcoin records in users’ e-wallets are maintained by a network of computers rather than a central authority. Mainly two categories of people are dealing in bitcoin in India, one with presence in public domain and others who operate in an unorganised manner through social media sites and mobile applications.