Unmasking Crypto Scams in India: Risks, Cases, and Investor Safety
🔍 India’s Crypto Boom—and the Vacuum in Regulation
India ranks among the top 3 countries in terms of cryptocurrency ownership, with millions of investors, especially millennials and Gen Z, exploring assets like Bitcoin, Ethereum, and Solana. The growth has been fueled by:
Rising smartphone and internet penetration
Dissatisfaction with traditional banking returns
Fear of missing out (FOMO) driven by social media hype
Easy access to crypto exchanges and mobile apps
However, this enthusiasm has outpaced government regulation and public education. Unlike traditional stock markets regulated by SEBI, India still lacks a comprehensive legal framework for cryptocurrency oversight. This regulatory vacuum has created the perfect storm for cybercriminals to operate freely, often across borders.
💣 Most Common Crypto Scams in India
Let’s break down the most frequently reported types of scams:
1. Ponzi and MLM (Multi-Level Marketing) Schemes
These scams are modern versions of age-old traps. Fraudsters lure investors with guaranteed returns, often monthly or weekly, by asking them to buy crypto or invest in a "trading platform." Returns are paid from new investors' money—not from actual profits.
Example:
GainBitcoin, operated by Amit Bhardwaj, promised 10% monthly returns in Bitcoin. It turned out to be one of India’s biggest crypto scams, impacting over 1 lakh people and causing losses exceeding ₹20,000 crore.
2. Fake Crypto Exchanges and Apps
Fraudsters create lookalike crypto exchanges or wallets, often with flashy designs and fake reviews. Users deposit funds and start trading, only to find their money disappear or withdrawal options mysteriously disabled.
Many fake platforms even make it to Google Play Store or App Store before being reported. Once exposed, scammers vanish—only to launch a new app under a different name.
3. Pump-and-Dump Schemes
These involve artificially inflating the price of a lesser-known token by spreading hype or false news on social media. Once retail investors buy in, the scammers "dump" their holdings, causing prices to crash and leaving others with huge losses.
This is especially common in Telegram groups, where influencers or “crypto experts” give buying tips for unknown coins with no real utility.
4. Phishing, Malware, and Wallet Hijacking
Phishing attacks often mimic popular crypto platforms. Users are tricked into clicking links that lead to fake login pages or scam airdrops. These can steal:
Wallet private keys
2FA codes
Recovery phrases
Once the scammer gets access, they can drain the wallet within seconds—irreversible and untraceable.
5. Celebrity Impersonation Scams
Scammers use fake profiles of public figures like Amitabh Bachchan, Elon Musk, Virat Kohli, or YouTube influencers to promote "once-in-a-lifetime" crypto offers. Their endorsements—though fake—trick users into trusting and investing.
Some even stream deepfake live YouTube videos featuring old interviews with superimposed messages like "Send 0.5 BTC to get 1 BTC back." Despite how ridiculous this seems, many still fall for it, losing crores collectively.
⚠️ Major Crypto Scam Cases in India
Let’s look at some real examples that shook the Indian crypto landscape:
🔸 GainBitcoin Scam (₹20,000+ Crore)
India’s largest crypto scam, it offered investors high returns through cloud mining packages. The mastermind, Amit Bhardwaj, created a web of lies, fake tech claims, and MLM tactics to build one of the most damaging Ponzi empires in crypto history.
🔸 Morris Coin Scam (₹1,200+ Crore)
In Kerala, Nishad K and his team launched a fake crypto token called Morris Coin and ran ads in national newspapers. They collected crores before the scheme collapsed.
🔸 YouTube Giveaway Scams
In 2023 and 2024, Indian investors lost lakhs to YouTube “crypto giveaway” livestreams using pre-recorded Elon Musk interviews asking users to send crypto and double it back. The wallets were one-way traps.
🏛️ Government & Legal Response: A Work in Progress
Despite the growing menace, India’s legal system is still catching up. Here’s what’s been done so far:
✅ Supreme Court Ruling (2020)
The ban on crypto by RBI (2018) was overturned, allowing exchanges and users to operate legally—but without regulation.
✅ 30% Tax on Crypto Profits (2022)
This move was less about regulation and more about tracking and taxing gains. However, it brought attention and legitimacy to crypto transactions.
✅ 1% TDS Rule
To discourage frequent trading and bring crypto under tax surveillance, 1% TDS was introduced on every trade.
✅ Enforcement Directorate (ED) Actions
The ED has cracked down on several crypto laundering and fraud cases. Still, most scams are too widespread and tech-savvy to stop with traditional investigative methods.
✅ Cybercrime Portal
Users can report scams on https://cybercrime.gov.in, but recovery is rare.
🛡️ How to Stay Safe in India’s Crypto Jungle
If you’re investing in crypto or planning to, safety must come first. Here’s a basic checklist to avoid getting scammed:
✅ Only use verified and reputed platforms
Stick to exchanges registered with FIU-IND like WazirX, CoinDCX, and CoinSwitch.
✅ Never trust guaranteed returns
Crypto is volatile. Anyone offering fixed profits is likely scamming you.
✅ Secure your private keys
Use hardware wallets or trusted digital wallets. Never share your seed phrase.
✅ Do not click suspicious links
Avoid airdrop messages or emails asking you to connect your wallet or verify funds.
✅ Verify endorsements
Just because someone famous appears to back a coin doesn’t mean it’s real. Always fact-check from official sources.
✅ Keep software updated
Ensure your phone, computer, and apps are updated to avoid malware threats.
Sanskar Kadu
Fintech Specialist
Asiatic International Corp
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