Crypto-Related Scam Targets Muslims with Halal Investment Offerings in India
India’s authorities have recently revealed a nearly year-old Ponzi scheme involving digital coins investments without the consent of investors and a kickback to a high-ranking politician with the aim to whitewash the fraud.
Central Crime Branch of Bangalore (CCB), a law enforcement agency for India’s Karnataka state, has taken into custody a local politician, Gali Janardhana Reddy, for his alleged attempts to cover-up a large cryptocurrency scam run by investment company Ambidant Constructions, local media reported on Monday. The crypto Ponzi scheme, which had targeted Muslims with Halal investment offerings, dates back to January 2018 but was revealed last week after the police took action against Reddy.
In January this year, India’s central law enforcement agency, the Enforcement Directorate (ED), raided the office of Ambidant Constructions, a company owned by Syed Ahmed Fareed and his son Syed Ahmed Afaq. The men offered Halal investments with returns of 50%. Fareed and Afaq bet the investors’ money into crypto assets without informing their clients. At first, Ambidant Constructions was able to pay the 50% dividends, due to the high price of virtual coins. However, the father and the son rapidly cut the size of payouts to 25%, then to 11%, and the last return was 9% in January, after which the Fareed and Afaq stole the investor money and closed Ambidant Constructions, ED claims.
According to the agency, Fareed and Afaq stole between $8-$13 million from investors. The men also have a Dubai-based investment company whose activities are also under investigation.
"We found that the company’s core business was nothing but a Ponzi scheme," the ED official said as quoted by Times of India. "Since it was not in our purview, we alerted the agencies concerned."
However, the authorized agencies have not taken any action, which prompted an additional investigation. The authorities revealed the scam last week after the arrest of Reddy, who is an ex-minister in the local government, a former head of the ruling BJP party for Karnataka, and one of the wealthiest businessmen in the region. According to ED and CCB, Reddy took 57 kg of gold as a bribe from Fareed and Afaq in an attempt to cover-up the crypto scam. Reddy denied all allegations claiming that all charges against him are politically motivated ahead of Karnataka elections next month.