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Indian authorities freeze assets of Highrich Group over alleged crypto fraud
India’s Enforcement Directorate (ED) has frozen around ₹32 crore ($3.83 million) in cash deposits and other assets linked to online group Highrich.
The group is under investigation for allegedly running a crypto Ponzi scheme.
For The Hinduciting sources close to the matter, the ED probe found that KD Prathapan and Sreena Prathapan’s Highrich group amassed around ₹1,500 crore ($179,532.75) from investors on the pretext of high returns and an annual interest rate of 15%.
The ED accused the promoters and stakeholders of the company of engaging in illegal cryptocurrency trading activities on different exchanges and promoting their own cryptocurrency, HR Crypto Coin.
The ED claims that these crypto assets were used in a Ponzi scheme, where investors were enticed with promises of high returns financed by contributions from new investors. According to the agency, investors were also promised a 30% direct income for introducing new customers to the program.
Since January, the ED has reportedly frozen ₹260 crore ($31.12 million), including ₹212 crore ($25.4 million), from 55 frozen bank accounts of the company and its owners. The probe also traced ₹15 crore ($1.8 million) in real estate linked to promoters and other leaders, allegedly acquired from the proceeds of crime.
Prompted by multiple complaints from Kerala Police, ED raided the premises of HighRich Smartech Pvt. Ltd., HighRich Online Shoppe Pvt. Ltd. and related entities, resulting in the total assets frozen or seized reaching ₹ 260 crores ($31,119,010.00)
Fight against cryptocurrency Ponzi schemes
Ponzi schemes are often disguised as real investment solutions. However, returns for existing investors are funded by contributions from new investors rather than actual profits.
These schemes remain a serious threat to global financial markets and investors. Recent high-profile cases highlight the urgency of implementing robust regulatory measures to prevent and mitigate the impact of such fraudulent practices.
In June 2022, Celsius Network, a once-fledgling cryptocurrency lending platform, stopped all transfers indefinitely and subsequently filed for Chapter 11 bankruptcy. The company had lent $8 billion to customers and managed nearly $12 billion in assets. An internal memo characterized their business model as similar to a Ponzi scheme.
In another notable incident, FTX, the world’s former second largest cryptocurrency exchange, filed for Chapter 11 bankruptcy in November 2022. It was revealed that customer assets had been used for risky investments, leading to huge financial losses. deficit.
It is the United States Securities and Exchange Commission (SEC). actively counter Ponzi schemes, which pose significant risks to investors and the financial system.
US Senator Elizabeth Warren did expressed significant concerns about the lack of regulatory oversight of the cryptocurrency market. He recently called for stronger SEC oversight to safeguard investors and ensure financial stability. However, Warren’s remarks have sparked a contentious debate within the cryptocurrency industry, with some leaders expressing apprehension about the potential implications of a more robust SEC presence.
SEC Chairman Gary Gensler has shown an increasing inclination toward regulatory the cryptocurrency market, supporting their integration into the financial regulatory framework.
In the same vein, Deputy Treasury Secretary Wally Adeyemo and others did so he echoed concerns about the need for stringent regulations to curb the misuse of cryptocurrencies for illicit purposes such as sanctions evasion and terrorist financing.