The Federal Investigation Agency (FIA) said on Friday it was probing a massive scam involving 11 Binance-linked applications, through which over $100 million (Rs17.68 billion) was fleeced from Pakistani investors.
The FIA’s Cyber Crime Wing of the FIA said that it issued a notice to an official from Binance, a popular cryptocurrency exchange as it launches an investigation into the mega-scam.
The agency has sought a reply from the Binance official. “A relevant questionnaire has also been sent to Binance Headquarters Cayman Islands and Binance US to explain the same,” added the statement released by the FIA Cyber Crime Wing Sindh on Friday.
“The FIA Cyber Crime Sindh has issued order of attendance to Hamza Khan, General Manager/ Growth Analyst at Binance Pakistan (Crypto Currency Exchange) to explain his position on the linkage of fraudulent online investment mobile applications with Binance," stated the handout.
Recently many online investment frauds are going on in Pakistan on the pattern of Ponzi Schemes wherein investors were promised unrealistically high returns on their investment if they bring in more clients.
"These schemes benefit old clients at the cost of new clients and ultimately disappear when they have made a substantial capital base worth billions of rupees. "
On December 20, People from all over Pakistan started contacting FIA Cyber Crime Sindh through social media and disclosed at least 11 mobile applications including MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK, 91fp have stopped working over a period of time and have defrauded Pakistani people of billions of rupees.
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The modus operandi of these applications was to ask people for registration at Binance Crypto Exchange (Binance Holdings Limited) meant for trading in virtual currencies like Bitcoin, Ethereum, Dodge Coin etc. The next step was to transfer money from Binance Wallet to the account of that particular application.
At the same time, all the members of the group were added in groups on Telegram Application where so-called expert betting signals, on the rise and fall of Bitcoin, were given by the anonymous owner of the application and admins of the Telegram groups.
Once a considerable capital base was established, these apps crashed thus robbing people of millions of dollars through Referral Bonus Process.
According to the initial findings of the enquiry, each of such applications had on average 5,000 customers with HFC reportedly having a maximum of 30,000 customers. The reported range of investment per person was from $100 to $80,000 with an estimated average of $2,000 per person thus making the estimated scam stand at nearly $100 million.
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FIA Cyber Crime Sindh stated that it has taken necessary actions to reach the root of this scam.
"All the Pakistani Bank accounts linked to such apps have been debit blocked; Telegram is being contacted to provide the whereabouts of admins of fraudulent apps; Social media influencers, promoting these apps, are being served with legal notices to explain their point of contact with apps."
At least 26 suspect blockchain wallet addresses (Binance address) have been identified where fraudulent amounts may have been transferred. Furthermore, the letter has been written to Binance Holdings Limited to give details of these blockchain wallet accounts.
"Binance has also been asked to provide with conditions, official supporting documents, integration mechanism of these API’s with Binance," it added.
The Cyber Crime Wing said that it expects Binance will adopt a liberal and swift approach in helping Pakistan track all these financial crimes.
“In case of non-compliance, FIA Cyber Crime will be justified to recommend financial penalties on Binance through State Bank of Pakistan,” it added.
It is pertinent to mention here that Binance is the largest unregulated virtual currency exchange where Pakistanis have invested millions of dollars.
FIA Cyber Crime Sindh has started steps towards keeping a close eye on peer to peer transactions done by Pakistanis on Binance to curb the menace of terror financing and money laundering as Binance is the largest easy-to-go platform facilitating such activities.
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