Investors from Pakistan have become victims of a massive fraud using cryptocurrency. The country’s main law enforcement agency has issued a notice to crypto exchange Binance in relation to the scam which resulted in the loss of $100 million dollars for Pakistanis, media reports revealed.
Fraudsters Lure Pakistanis to Invest in Cryptocurrency Through Binance
Pakistan’s Federal Investigation Agency (FIA) has uncovered a crypto investment scam that has allegedly cost Pakistani citizens some 17.7 billion rupees (around $100 million). Providing details on the case, Imran Riaz, director of the FIA cybercrime wing, said on Friday that the organizers used cryptocurrency. Quoted by local media, Riaz announced:
We launched a probe after receiving complaints regarding a fraud involving billions of rupees being committed using nine online applications.
The fraudsters employed mobile apps offering Pakistanis crypto investment opportunities and people sent between $100 and $80,000, or an average of $2,000 per person. Investors were urged to register at Binance, the world’s leading crypto exchange, and transfer the money from the Binance wallet to accounts linked to the applications. On Dec. 20, authorities were contacted by many users who complained that around a dozen apps had suddenly stopped working.
“During the inquiry, it was found that the fraudulent accounts of different applications, namely, MCX, HFC, HTFOX, FXCOPY, OKMINI, BB001, AVG86C, BX66, 91fp, TASKTOK, were linked with Binance wallets,” officials detailed. Each had an average of 5,000 customers. The FIA has issued a notice to Hamza Khan, identified as Binance’s representative for Pakistan, and summoned him to appear in person on Jan. 10.
“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,” the FIA said, quoted by the Express Tribune and other news outlets. “A relevant questionnaire has also been sent to Binance Headquarters Cayman Islands and Binance US to explain the same,” the agency added in a press release.
Authorities to Keep Close Eye on Pakistani Crypto Transactions
The FIA claims that it has identified 26 wallet addresses at Binance used to transfer the money. “A letter has been written to Binance Holdings Limited to give the details of these blockchain wallet accounts as well as to debit block them,” the agency stated, adding it had also requested supporting documentation and information about the apps’ integration with the coin trading 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 the State Bank of Pakistan (SBP) impose financial penalties. It has now started to closely monitor transactions made by Pakistanis on the exchange.
Law enforcement officials are also reaching out to the popular messaging app Telegram as members of the scheme were added to various groups spreading signals on the price fluctuations of bitcoin. The FIA is serving legal notices to social media influencers who have been promoting the apps and taking steps to block all bank accounts linked to the scam.
In December, the Federal Investigation Agency froze over 1,000 bank accounts and cards used by crypto traders from Pakistan. The purchase and sale of cryptocurrencies is still prohibited in the country as per a circular issued by the SBP in April 2018. Despite the ban, a recent report revealed that Pakistanis have invested $20 Billion in crypto assets. Calls have been mounting for the government to regulate related transactions.
Do you expect Pakistan to further restrict crypto investments and trading after this fraud case? Let us know in the comments section below.
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