A 36-year old man has been arrested by police in the southern Indian state of Kerala in connection with operating a three-pronged cryptocurrency ponzi scheme that promised “mouthwatering” returns to investors.
The 36-year-old, who is identified in the New Indian Express as Nishad K., allegedly operated the scam through three entities that he was the chief executive of: Long Reach Global, Long Reach Technologies, and Morris Trading Solutions.
Promises of high returns & and a total lack of transparency
Nishad allegedly took investments in the scheme by offering ‘Morris Coins’, which are not listed for trading on any known cryptocurrency exchange. Investors were required to put a minimum of 15,000 Rupees (roughly $200) for a “lock-in” period that lasted a minimum of 300 days; they were promised a per-day minimum return of 270 Rupees (roughly $3.70, or 1.85% of the minimum investment).
Additionally, police have reported that the project offered a 10-40 percent commission to investors for bringing new investors into the Morris Coin fold.
Indeed, the Morris Coin project has all of the trappings of a traditional cryptocurrency Ponzi scheme: promises of high returns, big incentives to bring in new players, and a total lack of transparency (the Morris Coin website shares no information about how the project is run or who is involved.)
However, initial investigations have revealed that Nishad told his investors that the business was perfectly legitimate.
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Police were reportedly tipped off by someone outside of the scheme
Police said that they have “recently raided Nishad’s house and have seized documents related to his financial dealings.”
“We are looking into the documents and we have taken statements from some of his ‘clients’ in the area. Nishad will soon be quizzed in the case.”
Interestingly, though, there have not yet been any complaints from Morris Coin investors–rather, District Police Chief Abdul Karim is said to have received a tip from someone outside of the scheme.
“We have not received any complaint,” said Vishnu P., Circle Inspector of Pookkottumpadam, told the New Indian Express. “We think he has gained their confidence by paying 0.5 to 3 percent interest on their investment every day for a certain period of time.”
However, “even without a complaint, action will be taken against the company owners for running a money chain [ponzi scheme] business,” Vishnu said.
Unfortunately, cryptocurrency Ponzi schemes seem to have become somewhat popular in India. CoinTelegraph reported earlier this year that Between 2017 and 2019, Indian investors lost nearly $500 million to scams operated within India and abroad.