1. Investors bought commodities on NSEL platform from borrowers, who were supposed to have those commodities in stock. 2. Investors were given letters by borrowers stating that the commodities were stocked in NSEL warehouses. Borrowers were supposed to have submitted warehouse receipts with NSEL. They had to return the money after 25 days to the investors with returns on borrowed money and take those letters back. 3. The borrowers paid returns to the investors, and both struck new deals with the same money. 4. The trade cycle continued on paper and the investors kept getting the promised returns. No one actually bought or sold commodities. 5. The Government found NSEL was not following the norms and stopped trading. The borrowers defaulted on payments to investors because there were no stocks in the warehouses to begin with. The receipts submitted to NSEL were forged.