The Economic Offences Wing (EOW) of the Mumbai Police has booked a Goregaon resident for duping investors by floating a multi-level marketing scheme inviting them to invest in his cryptocurrency — ATC coins. The accused lured investors advertising that the ‘virtual currency’, on completion of the lock-in period of 18 months, can be used to make online shopping. He also promised various incentives.
According to the complaint, the accused, Subhashchand Jewria, had in March this year incorporated ATC Coin Ltd in the United Kingdom, with a paid up capital of one pound under the garb of selling his cryptocurrency. Jewria floated a multi-level marketing scheme, enticing investors by offering 10 percent cash back per month on the invested amounts and also assuring incentives like a paid family holiday to Singapore, high-end cars like Jaguar, Mercedez Benz and others.
A cryptocurrency is a digital asset used to trade. The virtual currency uses cryptography to secure transactions and control creation of additional units of the currency. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created.
The accused floated various websites – http://www.atccoinmlm.com, http://www.atccoin.net and http://www.cryptoinbox.com – through which he invited people to invest between Rs 5,000 and Rs 20,000 in the compa’y’s scheme. The accused also claimed that after a lock-in period of 18 months, ATC coins allocated to the investor could be traded on exchanges. He also said that it can be used to make purchases and foot utility bills on Flipkart and Patanjali claiming that they have a tie-up with these companies, which accept the virtual currency, the police said.
The EOW claims that the accused managed to raise Rs 84 crore, which he diverted to his personal accounts. “We received information on cryptocurrency ATC coin floated by Jewria. Subsequently, a reference from the RBI forwarding an anonymous complaint with the same allegation was also received. Accordingly, a Preliminary Enquiry (PE) was constituted and after scrutinising the statement of accounts, we found that it was a bogus scheme floated by Jewria in the garb of a cryptocurrency,” said an official privy to the probe details.
The EOW booked Jewria and his brother, Chirag, besides ATC Coins Ltd and Jewria Services Club India Pvt Ltd, under cheating (420), criminal breach of trust (409) and criminal conspiracy 120 (B) of the Indian Penal Code (IPC) and certain sections of the MPID Act. The agency has also frozen 28 accounts and conducted searches at the office and residential addresses of the accused persons.
The EOW probe revealed that ATC Coin Ltd, a UK-registered company with a registered address in Covent Garden, London, was floated to engage in the business of fund management and also create a cryptocurrency by name ‘ATC Coin’ with Jewria as its sole director”
“When we verified the office address, we found that around 9,000 companies were registered at the said address. However, it did not include the name of ATC Coin Ltd, thus it is a fictitious company which only exists on paper, added the official”
“The investors were asked to deposit the money in the account of Jewria Services Club India Pvt Ltd. Brothers Subhashchand and Chirag are the directors of this firm. Ideally, the amount should have gone to the account of ATC Coin Ltd, however, not single rupee was deposited in the account. Instead, a major portion of this amount has been transferred to the personal accounts of the two directors,” added the official”
“It a classic case of fraud committed by floating a multi-level marketing scheme and luring investors with high returns and enviable rewards like sponsoring a foreign vacation or gifting high-end cars and also the claim that after completion of a lock-in period of 18 months, the cryptocurrency could be used for online shopping,” said an official.
When the EOW probed the claims, it found that the company had not entered into any agreement with Flipkart and the virtual currency was not accepted on its portal. The agency has written to Patanjali and is awaiting its response”
“An enquiry with Flipkart revealed that it had not entered into any tie-up with ATC Coin Ltd. Similarly, the claim that ATC coin can be used for utility bills is not supported by any evidence. We think that it will be the case with Patanjali also,” added the official.
When contacted, a Flipkart spokesperson said, “Flipkart does not accept any form of crypto currency or mode of payment that is not legal as per Indian laws.”
The RBI has in the past cautioned the public about the risks of using virtual currency. An RBI release states that the creation, trading or use of virtual currency for payment was not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities”
“This shows the claims that ATC coin can be used to make utility bill payments and other purchases is false,” the official added.