The Enforcement Directorate (ED) of India has frozen roughly ₹32 crore ($3.83 million) in money deposits and different property linked to the Highrich on-line group.
The group is beneath investigation for allegedly working a crypto Ponzi scheme.
Per The Hindu, citing sources near the matter, ED’s investigation uncovered that Ok.D. Prathapan and Sreena Prathapan’s Highrich Group amassed roughly ₹1,500 crore ($179,532.75) from traders beneath the guise of excessive returns and a 15% annual rate of interest.
The ED has accused the corporate’s promoters and stakeholders of partaking in unlawful cryptocurrency buying and selling actions on a number of exchanges and selling their very own cryptocurrency, HR Crypto Coin.
The ED alleges that these crypto property had been utilized in a Ponzi scheme, the place traders had been enticed with guarantees of excessive returns funded by new investor contributions. Based on the company, traders had been additionally promised a 30% direct referral earnings to introduce new prospects into the scheme.
Since January, the ED has reportedly frozen ₹260 crore ($31.12 million), together with ₹212 crore ($25.4 million), from 55 frozen financial institution accounts of the corporate and its house owners. The investigation additionally traced ₹15 crore ($1.8 million) in immovable properties linked to the promoters and different leaders, allegedly acquired from proceeds of crime.
Prompted by a number of complaints by Kerala Police, ED raided the premises of HighRich Smartech Pvt. Ltd., HighRich On-line Shoppe Pvt. Ltd., and associated entities, ensuing within the whole frozen or seized property reaching ₹260 crore ($31,119,010.00)
Combatting crypto Ponzi schemes
Ponzi schemes are sometimes disguised as actual funding options. Nonetheless, returns for present traders are funded by new investor contributions quite than precise earnings.
These schemes stay a severe menace to world monetary markets and traders. Latest high-profile instances underscore the urgency of implementing strong regulatory measures to stop and mitigate the influence of such fraudulent practices.
In June 2022, Celsius Community, a once-fledgling cryptocurrency lending platform, halted all transfers indefinitely and subsequently filed for Chapter 11 chapter. The corporate had loaned out $8 billion to shoppers and managed almost $12 billion in property. An inside memo characterised their enterprise mannequin as resembling a Ponzi scheme.
In one other notable incident, FTX, the previous second-largest cryptocurrency trade on the earth, filed for Chapter 11 chapter in November 2022. It was revealed that buyer property had been used for dangerous investments, resulting in a considerable monetary shortfall.
The U.S. Securities and Trade Fee (SEC) is actively combating Ponzi schemes, which pose important dangers to traders and the monetary system.
U.S. Senator Elizabeth Warren has expressed important considerations in regards to the cryptocurrency market’s lack of regulatory oversight. She has just lately referred to as for stronger SEC supervision to safeguard traders and guarantee monetary stability. Nonetheless, Warren’s remarks have ignited a contentious debate inside the crypto business, with some leaders voicing apprehension over the potential implications of a extra strong SEC presence.
SEC Chair Gary Gensler has proven a rising inclination in the direction of regulating the cryptocurrency market, advocating for his or her integration into the monetary regulatory framework.
In the identical vein, Treasury Deputy Secretary Wally Adeyemo and others have echoed considerations in regards to the necessity for strong laws to curb the misuse of cryptocurrencies for illicit functions akin to sanctions evasion and terrorist financing.