The Federal Investigation Agency (FIA) of Pakistan is examining possible links between the Bitcoin exchange Binance and a multi-million-dollar cryptocurrency scam in the region, according to Dawn.
The FIA’s cybercrime division has demanded that regional manager Hamza Khan explain the agency’s position regarding ties to ‘fraudulent mobile apps for online investing’. The corresponding requests were also sent to the exchange’s Cayman Islands headquarters and Binance US.
According to the agency, the investment fraud was conducted in the form of a Ponzi scheme, where users were promised high returns for recruiting new customers.
Investors were asked to register on Binance, and then transfer funds to a third-party wallet to receive profits. After attracting sufficient capital, the organizers disappeared with the users’ funds.
“These schemes benefit existing customers at the expense of new ones. In the end they disappear, having built up a substantial base of capital worth billions of rupees,” the FIA explained.
Based on complaints from victims, authorities identified at least eleven such apps that closed in December 2021: MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK and 91fp.
On average, each had about 5,000 users, though HFC had 30,000 clients.
“The reported range of investments per person was from $100 to $80,000 — an average of $2,000. Thus, the loss from the scam was estimated at nearly $100 million,” the FIA statement cited the publication.
Authorities identified at least 26 suspicious wallets on Binance where stolen funds could have been transferred. The authorities asked the exchange to provide details and to block the accounts. The FIA also wants to determine the mechanism by which the fraudulent apps integrate with Binance’s API to provide services.
The agency said it expects a “liberal and swift approach” from the exchange in assisting the investigation. Otherwise, the FIA recommends that the State Bank of Pakistan fine Binance.
Earlier, Indian authorities began an investigation into possible money laundering by operators of online apps through the Binance-owned WazirX exchange. The platform was also accused of tax evasion.
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