Pakistan: Investors lose millions to crypto scam
Pakistan: Investors lose millions to crypto scam

Investors in Pakistan have fallen victim to a massive fraud using cryptocurrencies. The country's top law enforcement agency has issued a notice to cryptocurrency exchange Binance regarding the scam that resulted in the loss of $100 million for Pakistanis, media reports revealed.

Fraudsters lure Pakistanis to invest in cryptocurrencies via Binance

Pakistan's Federal Investigation Agency (FIA) has uncovered a cryptocurrency investment scam that allegedly cost Pakistani citizens some 17.7 billion rupees (about $100 million). Providing details of the case, Imran Riaz, director of the FIA's cybercrime branch, said Friday that the organizers used cryptocurrencies. Quoted by local media, Riaz announced:

"We have launched an investigation after receiving complaints about a fraud involving billions of rupees committed using nine online applications."

The fraudsters employed mobile apps offering cryptocurrency investment opportunities to Pakistanis and people sent between $100 and $80,000, averaging $2,000 per person. Investors were invited to sign up for Binance, the world's leading cryptocurrency exchange, and transfer money from the Binance wallet to accounts linked to the apps. On December 20, authorities were contacted by numerous users who complained that a dozen apps had suddenly stopped working.

"During the investigation, it was found that the fraudulent accounts of different apps, namely MCX, HFC, HTFOX, FXCOPY, OKMINI, BB001, AVG86C, BX66, 91fp, TASKTOK, were linked to Binance wallets," officials detailed. Each of them had an average of 5,000 customers. The FIA issued a notice to Hamza Khan, identified as Binance's representative in Pakistan, and summoned him to appear in person on January 10.

"The FIA Cyber Crime Sindh has issued an attendance order to Hamza Khan, managing director and growth analyst at Binance Pakistan (Cryptocurrency Exchange) to explain his position on the link between fraudulent online investment mobile apps and Binance," the FIA reported, as cited by the Express Tribune and other news outlets. "A relevant questionnaire was also sent to Binance's Cayman Islands headquarters and Binance US to explain the same," the agency added in a press release.

Authorities are keeping a close eye on Pakistani crypto transactions

The FIA says it has identified 26 wallet addresses at Binance used to transfer the money. "A letter has been written to Binance Holdings Limited giving details of these blockchain wallet accounts as well as blocking them in debit," the agency said, adding that it has also requested supporting documents and information about the apps' integration with the cryptocurrency exchange platform.

Noting that Binance is the "largest unregulated virtual currency exchange" where Pakistanis have invested millions of dollars, the FIA warns that in case of non-compliance, its cybercrime unit could recommend financial penalties to the State Bank of Pakistan (SBP). It has begun closely monitoring transactions made by Pakistanis on the platform.

Law enforcement has also reached out to the popular messaging app Telegram, as members of the system have been added to various groups broadcasting signals about bitcoin price fluctuations. The FIA is issuing legal notices to social media influencers who promoted these apps and taking steps to block all bank accounts linked to the scam.

In December, the Federal Investigation Agency froze more than 1,000 bank accounts and cards used by traders in Pakistan. The buying and selling of cryptocurrencies is still banned in the country, according to a circular issued by the SBP in April 2018. Despite this crackdown, a recent report revealed that Pakistanis have invested $20 billion in crypto assets. There have been increasing calls for the government to regulate linked transactions.

Do you expect Pakistan to further restrict crypto investments and exchanges after this fraud case? Let us know your humble opinion by contacting us via Telegram. And if you have any questions about this topic or the crypto world as a whole, BullsInvest will be happy to answer them!

 

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