India’s crypto economy | The dark side of the crypto boom


Dear reader,

Ponzi schemes are a seemingly lucrative business for thugs as they promise incredible returns in the shortest possible time. After being released on bail by the Bombay High Court, one of the main defendants in the infamous GainBitcoin crypto scam (yes, another Ponzi scheme) told Inc42: “Showing huge returns and lavish parties in the Maldives… it was the most attractive tool that people fell for. for! I did it too. “

In the latest incident, the Bengaluru Police City Crime Branch (CCB) arrested Ranganath DS, a resident of Chikmagalur, for allegedly running a Ponzi scheme under the false company name DIGITECH MARK and deceiving more than 2,000 people. One case has been registered with the cybercrime unit, and further investigation is underway. Ranganath has been reserved under various sections of the Information Technology Act, IPC Act, Prize Tokens, and Money Circulation (Prohibition) programs.

Since Bitconnect and GainBitcoin, these Ponzi schemes have flourished thanks to the huge, hassle-free returns that crypto investors are supposed to get.

Much like Amit Bhardwaj of GainBitcoin or Divyesh Darji of Bitconnect Gujarat Scam, Ranganath promised mind-boggling returns on crypto investments and his clients paid the sum. For example, he promised a fixed return of 1 lakh INR after 12 months if someone put in 15,000 INR. Likewise, an investment worth INR 50,000 had a guaranteed fixed return of INR 3 Lakh after 12 months.

According to Bengaluru police, Ranganath had duped more than 2,000 people from Bengaluru, Hubli, Dharwad, Mysuru and Mangaluru.

This is not an isolated case. Over the past five years, Indian crypto investors have lost billions. An exact figure will be difficult to come up with as the prominent investors in these Ponzi schemes have not come forward to file complaints or claim their investments.

As we examine the details of Ponzi schemes rooted in fictitious crypto investments, some interesting developments appear to have taken place over the past couple of years. According to a Crypto Crimes Report from Chainalysis, scams remained the highest-grossing crypto crime in the world, but total scam revenue declined significantly in 2020 from around $ 9 billion to just under $ 2 billion. , $ 7 billion.

However, the number of individual payments to fraudulent addresses has increased from just over 5 million in 2019 to 7.3 million in 2020, suggesting that the number of individual scam victims has increased by more than 48%. .

A lot of information can be obtained from the data collected by Chainalysis. And that’s quite worrying because the value of crypto Ponzi schemes is commensurate with the economy, experts say. For example, the extent of scams in terms of value has greatly diminished in 2020 as the global economy shrinks to a large extent due to the pandemic and subsequent lockdowns implemented to contain the spread of Covid- 19. But the number of people who fall prey to con artists has continued to rise regardless of the pandemic.

Now that the second wave of Covid-19 appears to be slowing down and the economy is back on the road to recovery, will the number of Ponzi schemes also increase?

For excessive reading

Verkle tree: Merkle tree has been commonly used by blockchains such as Bitcoin, Ethereum to create evidence, a fundamental part of blockchain technology. However, because their proof sizes are long, the newly developed Verkle trees are now shaping up to be the key component of future Ethereum scaling upgrades. In his blog, Ethereum founder Vitalik Buterin explains the difference between Merkle and Verkle tree. “If a tree contains a billion data, doing a proof in a traditional Merkle binary tree would require about 1 kilobyte, but in a Verkle tree the proof would be less than 150 bytes, a reduction enough to render clients stateless. finally viable in training. ”Read it here.

Bitcoin Millionaires – Join This Club: As of May 2020, there were over 8 million bitcoin millionaires, and each needed over 113 bitcoins (to maintain their millionaire status) because the price of this crypto was as low as $ 8.8,000. Since then, the price of bitcoin has skyrocketed, then went from $ 60,000 to $ 35,000. But you now need to own only a quarter of bitcoins (compared to 2020) to become a bitcoin millionaire. Blogger Sylvain Saurel enters the mathematical part and analyzes how easy it becomes over time. Read the blog here.

Tweet of the week

Responding to Elon Musk’s abilities to move the entire crypto market with significant margins, Binance Founder and CEO Changpeng Zhao said that tweets that hurt other people’s finances are not funny but irresponsible.

explained | Crypto taxation in India

Unlike in previous years, FY21 has seen a significant increase in the number of crypto traders and investments around the world. In India, the number of crypto traders has grown from 5 million to 15 million in the last year alone. The growing number, along with crypto-related frauds, have alarmed several regulators, including the Reserve Bank of India (RBI), the Income Tax (IT) Department, the Enforcement Branch ( ED) and others. As the filing of tax returns currently remains the goal of most households and businesses, it has become imperative to understand the details of crypto taxation in India.

Should we declare crypto as a foreign asset or pay 18% GST on its purchase? Should it be subject to capital gains tax or business income? Whichever way we look at it, there isn’t much clarity on how crypto transaction taxes and income should be defined. This week, Inc42 spoke with experts to provide much needed clarification. Read it here.

Crypto this week | News Make the rounds

Coinbase Expands Team In India, Offers $ 1,000 In Crypto As Welcome Kit

The United States-based crypto exchange Coinbase is set to strengthen its presence in India. Pankaj Gupta, head of the company in India and vice president of engineering, announced his plans for expansion in India in a series of tweets. As part of its welcome kit, the company is also adding a one-time incentive of $ 1,000 in crypto to Coinbase accounts for new hires.

The global exchange also plans to create a Crypto App Store similar to Apple’s App Store.

In his latest blog post, co-founder and CEO Bryan Armstrong announced plans to start a crypto store at Coinbase.

UK financial watchdog FCA bans Binance

The Financial Conduct Authority (FCA), the UK’s financial regulator, recently banned Binance (Binance Markets Limited), the world’s largest cryptocurrency exchange. “BML is not authorized to undertake any regulated activity in the UK,” the regulator said.

He also noted that no other entity in the Binance Group holds any form of authorization, registration or license in the UK to conduct regulated activity in the country.

Crypto enthusiast John McAfee commits suicide

Larger-than-life software mogul John McAfee, founder of the eponymous security software company and crypto enthusiast, has been found dead in his Spanish prison cell after being held there for around nine months. His body was found hanged in his cell.

Autopsy reports confirmed that he had committed suicide. On several occasions in the past, McAfee has said that if he is found dead by hanging it will mean he has been murdered.

Besides McAfee Associates, which was acquired by Intel for $ 7.68 billion, John McAfee had led several companies, including MGT Capital Investments and Luxcore, a cryptocurrency company focused on enterprise solutions.

Let’s talk: Jack Dorsey to sit down with Elon Musk on Bitcoin

Lately, a series of tweets from Tesla founder and CEO Elon Musk have had a significant impact on the crypto market. As people continue to lose their investments, Twitter’s Jack Dorsey is now ready to sit down with the ‘Bitcurious’ Musk to talk about bitcoin. The event could take place in July and will be part of B Word, a bitcoin-focused initiative that aims to demystify and de-stigmatize traditional Bitcoin narratives.

Can Dorsey help change Musk’s opinion on bitcoin? What do you think?

Until next week,

Suprita Anupam


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