India’s CBI Conducts Nationwide Search Operation in Crackdown on App-Based Crypto Investment Fraud

The Central Bureau of Investigation (CBI) in India has launched a nationwide search operation as part of an ongoing investigation into an app-based crypto fraudulent investment scheme. The operation, spanning 30 locations across 10 states and Union Territories, aims to crack down on individuals and companies involved in the HPZ Token App scheme, according to a report from India Today.Per the report, the CBI’s searches targeted two private companies and their directors, who stand accused of misleading the public and enticing them to invest in a non-existent cryptocurrency mining machine rental scheme. During the raids, incriminating documents and crucial digital evidence such as mobile phones, hard drives, SIM cards, debit cards, and email accounts were seized.

HPZ Token App Promised High Returns on Investments

The HPZ Token App promised users high returns on their investments through mining machines for popular cryptocurrencies like Bitcoin. The fraudsters lured unsuspecting victims by guaranteeing astronomical profits from Bitcoin mining investments. The investigation has so far identified approximately 150 bank accounts allegedly used by the accused to collect funds from investors.

#CBI today conducted raids across 30 locations in 10 states and Union Territories as part of an investigation into a fraudulent investment scheme linked to the HPZ Token App. The investigation is regarding #misleading the public into investing in a non-existent #cryptocurrency… pic.twitter.com/R0Be4zQOm6

— All India Radio News (@airnewsalerts) May 1, 2024

According to investigators, the initial payouts made to some investors were likely intended to build trust before the funds were surreptitiously transferred abroad. 

In many cases, the money was converted into cryptocurrencies or moved through Hawala transactions, a method of informal money transfer.

The CBI’s crackdown on this app-based crypto investment fraud comes shortly after the Directorate of Enforcement (ED) of India announced it has seized a major crypto money laundering case connected to a gaming app. 

The authority also seized frozen crypto assets worth ₹90 crore ($10 million) in connection with the scam.

The frozen cryptos were kept in 70 accounts, linked to major crypto wallets Binance, ZebPay, and WazirX.

“These crypto assets were subsequently taken into possession of ED and transferred into the crypto wallet of ED,” the ED said. 

The app, called E-Nugget, masqueraded as a gaming platform, and reportedly enticed gamers, promising multi-fold returns on their investments.

Indians with Retirement Plans Are Investing in Crypto

A recent survey conducted by Mudrex has unveiled that nearly half of individuals with retirement plans in India have entered the realm of crypto.The Mudrex survey, which focused on crypto investments, found that 45% of users with retirement plans have allocated funds to cryptocurrencies.The survey also shed light on the evolving perception of cryptocurrencies as a mainstream asset class. For one, 50% of respondents said they believed that cryptocurrencies would become the primary asset class within the next five years, indicating a rise in confidence and acceptance within the crypto space.As reported, the recent surge in the price of Bitcoin has injected fresh life into Indian cryptocurrency exchanges, as trading volumes on the top platforms reached a ten-month high in February. CoinDCX, WazirX, and BitBNS, the leading Indian exchanges, recorded trading volumes of $2.6 million, $3.4 million, and $7.8 million last month, respectively.