The cyber cell unit of the Crime Branch has arrested two people for allegedly setting up a multi-level marketing racket and selling cryptocurrency after claiming that they were associated with Rosneft, Russia’s premier petroleum company.
The accused launched two cryptocurrencies and made more than 1,000 people invest with the promise of “interest rates from 8-17%”. Police claimed that the accused made “several crores”.
DCP (Cyber and FICN) Bhisham Singh said the accused, Ashish Malik and Sandeep Kaushik, organised foreign trips to Russia, Thailand and Dubai, where more than 200 investors were taken to five-star hotels and showed presentations on cryptocurrency where Indian celebrities also spoke.
As per RBI guidelines, “creation, trading and usage of virtual currencies, including Bitcoin, as a medium is not authorised by the Central Bank or any other monetary authority”. In violation of these guidelines, the accused started two cryptocurrencies with no ‘block chain’, meant to keep track of transactions, police said. In the recent Bitcoin market crash, the value of these currencies was wiped out.
The team, led by inspector Sandeep Malhotra under the supervision of ACP Sanjeev Tyagi, worked for more than four months on the case. Police came to know about the case when one of the investors, Vinod Kumar, claimed the accused had taken Rs 7,50,000 from him by claiming they were a part of ‘Rosneft hedge fund’. Another police complaint was filed by Ravinder Pal, who claimed to have paid 27 Bitcoins to the accused.
“Most of the victims had invested through cash and cheques. The accused initially started the ‘Rosneft hedge fund’ in January 2017 and later changed their name to RHF coin, at an initial offering of Rs 3.50 per coin. After the recent Bitcoin crash, their value plummeted, so they introduced ‘RHF Gold’ as a marketing gimmick four days ago. This had no value,” said a senior officer.
Police mounted technical surveillance on their phones and arrested the accused from Dwarka’s Sector 18. “They never registered with the Registrar of Companies,” the officer said. A third accused has been arrested in Punjab.