At least 900 people were scammed of over Rs 1,200 crore after they invested in an “initial coin offering” floated by a Kerala man for a non-existent cryptocurrency, Enforcement Directorate officials said Wednesday.
ED sources said investment in fake crypto coins had taken place in 2020, mostly during the lockdown. The affected people had bought the “Morris Coin”, listed with a Coimbatore-based cryptocurrency exchange called Franc Exchange, in a manner similar to an initial public offering purchase, said officials.
“Ten Morris coins were valued at Rs 15,000 with a lock-in period of 300 days. The currency was fake. The investors were given an e-wallet and told that the coin value would boom when traded in the exchange. But the promoters of the coin siphoned out the money and illegally invested in immovable properties in Kerala, Tamil Nadu and Karnataka, particularly in real estate without showing any source of income,’’ said an ED source.
The agency carried out searches over the last few days in Kerala, Tamil Nadu, Karnataka and Delhi at 11 premises of firms linked to the racket, such as the Bengaluru-based Long Rich Technologies, and Morris Trading Solutions, among others.
The searched premises also included Unni Mukundan Films Pvt. Ltd, floated by Malayalam actor Unni Mukundan, and Nextel Group, which has stakes in the hospitality industry in Kerala.
The actor told reporters that the searches were linked to a film production company launched by him. “The ED official wanted to know about the source of income behind the venture. I have given them all the details,’’ he said.
ED has identified 31-year-old Nishad, who is from Pookkottumpadam village in Malappuram district, as the kingpin of the fraud. ED officials claimed the actor had links with Nishad but did not reveal their nature.
ED had last year picked up the money laundering case after the police in Kannur and Malappuram districts registered several cases against Nishad and others under Section 420 (Cheating) of IPC as well as the Prize Chits and Money Circulation Schemes (Banning) Act.
Long Rich Technologies, Long Rich Trading and Long Rich Global, all based in Bengaluru, had initially lured investors saying they had an online education app. Morris coin was projected as their crypto coin listed with a cryptocurrency exchange.
In between, the alleged perpetrators also ran a Ponzi scheme. Many of the investors had approached the police after the company stopped transferring the promised returns.
Sources said those behind the scheme, including Nishad, do not have any financial background or educational qualification. They also declined to name the other suspects.
“They had shell companies in Kerala, Tamil Nadu and Karnataka. They were pretenders who boasted about their links with celebrities from various walks of life and they attracted gullible investors with promotional events. They don’t have any financial backing. As our probe is underway, at this stage we cannot reveal more about all those who have been associated with the crypto coin racket,’’ a source said.
Nishad had left the country after obtaining anticipatory bail from Kerala High Court in the police cases.