The Enforcement Directorate (ED) of India has frozen roughly ₹32 crore ($3.83 million) in money deposits and different belongings linked to the Highrich on-line group.
The group is underneath 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 buyers underneath 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 belongings had been utilized in a Ponzi scheme, the place buyers had been enticed with guarantees of excessive returns funded by new investor contributions. In keeping with the company, buyers had been additionally promised a 30% direct referral revenue 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 homeowners. 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 belongings reaching ₹260 crore ($31,119,010.00)
Combatting crypto Ponzi schemes
Ponzi schemes are sometimes disguised as actual funding options. Nevertheless, returns for current buyers are funded by new investor contributions quite than precise earnings.
These schemes stay a critical menace to world monetary markets and buyers. Current 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 practically $12 billion in belongings. 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 this planet, filed for Chapter 11 chapter in November 2022. It was revealed that buyer belongings 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 vital dangers to buyers and the monetary system.
U.S. Senator Elizabeth Warren has expressed vital considerations concerning the cryptocurrency market’s lack of regulatory oversight. She has lately referred to as for stronger SEC supervision to safeguard buyers and guarantee monetary stability. Nevertheless, Warren’s remarks have ignited a contentious debate inside the crypto trade, 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 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 concerning the necessity for strong laws to curb the misuse of cryptocurrencies for illicit functions akin to sanctions evasion and terrorist financing.
