India: maxi raid against a decade-old crypto scam

In what is shaping up to be one of the largest operations against digital financial crime in the country, India's Enforcement Directorate (ED) has dealt a major blow to an organisation accused of running a giant cryptocurrency scam.

On 18 December, government agents carried out coordinated raids at 21 strategic locations between the state of Karnataka, Maharashtra and the capital Delhi.

The operation, conducted under the Prevention of Money Laundering Act (PMLA), targeted offices and residences linked to 4th Bloc Consultants and its associates. At the centre of the investigation is a sophisticated scheme that allegedly embezzled large sums of money from unsuspecting investors, both in India and abroad, for nearly a decade.

ULTIMATE HOUR: The ED conducts raids at 21 locations across Karnataka, Maharashtra and Delhi for a major cryptocurrency investment fraud case. Identified movable and immovable properties in India and abroad. Identified multiple crypto wallet addresses. Ongoing investigation. It has reported Crypto India on X.

An empire built on the mirror of profit

According to the findings of the investigation, which stemmed from a complaint by the Karnataka state police, the fraudsters operated through fictitious investment platforms. These portals were designed to look extremely professional: they faithfully reproduced the interface of the best-known global exchanges, complete with personal dashboards, real-time balances and transaction histories.

However, behind this technological façade, no real market transactions took place. Funds paid in by users were simply laundered in a structure that investigators describe as a 'classic Ponzi scheme' or multi-level marketing (MLM) model.

Manipulation Strategies: from 'Deepfake' to social media

In order to increase its credibility, the organisation did not hesitate to use the image of well-known cryptocurrency commentators and public figures without consent. These fake testimonials served to reassure newcomers.

The group's tactics followed a tried-and-tested script:

• Initial bait:The first investors were effectively paid small returns to generate trust.
• Expansion:Once a victim was won over, they were encouraged to invest larger amounts of capital and recruit new members through referral bonuses.
• Propaganda:The massive use of social networks such as Facebook, Instagram, WhatsApp and Telegram allowed the network to expand extensively on an international scale.

The labyrinth of money laundering: Hawala and phantom wallets

The money stolen, dubbed by investigators as 'proceeds of crime', never stood still. The ED reconstructed a complex system of concealment involving:

1. Multiple crypto wallets: Used to split up the sums and make them difficult to trace.
2. Hawala paper companies and channels: To transfer the funds outside legal banking circuits.
3. Undeclared foreign accounts: Where the money was 'parked' after being converted from crypto to cash via peer-to-peer (P2P) transactions.

During the searches, authorities identified numerous digital wallet addresses and seized movable and immovable assets acquired in India and abroad with the proceeds of the illicit activities.

A decade-long development

What concerns investigators the most is the longevity of the operation, which allegedly dates back to at least 2015. Over the years, the promoters of 4th Bloc Consultants have been able to evolve their techniques, adapting to the growing regulations of the crypto sector to escape scrutiny.

While the analysis of the seized servers and devices continues, the ED has made it known that the investigation is far from over. The goal now is to map the entire network of foreign entities involved and recover as much as possible to compensate the thousands of victims who fell into the trap of easy money.