At least 900 people were scammed over Rs 1,200 crore after investing in an “initial coin offering” by a Kerala man for a non-existent cryptocurrency, officials said on Wednesday of the Directorate of Law Enforcement.
ED sources said investments in fake crypto coins took place in 2020, mostly during the lockdown. Those affected had purchased the “Morris Coin,” listed with a Coimbatore-based cryptocurrency exchange called the Franc Exchange, in a manner similar to a first-time public offering, officials said.
“Ten Morris coins were valued at Rs 15,000 with a blocking period of 300 days. The money was fake. Investors were given an electronic wallet and said the coin will rise in value when traded on the exchange. But the promoters of the coin have siphoned off the money and illegally invested in real estate in Kerala, Tamil Nadu and Karnataka, including real estate without showing any source of income, ” an ED source said.
The agency raided in recent days in Kerala, Tamil Nadu, Karnataka and Delhi 11 premises of companies linked to racketeering, such as Long Rich Technologies, based in Bengaluru, and Morris Trading Solutions, among others.
The premises searched also included Unni Mukundan Films Pvt. Ltd, launched by Malayalam actor Unni Mukundan, and Nextel Group, which has stakes in the hotel industry in Kerala.
The actor told reporters the research was linked to a film production company he had started. “The ED manager wanted to know the source of income behind the business. I gave them all the details, ” he said.
ED identified Nishad, 31, from Pookkottumpadam village in Malappuram district, as the hub of the fraud. ED officials claimed the actor had ties to Nishad but did not disclose their nature.
Last year ED seized the money laundering case after police in Kannur and Malappuram districts registered several cases against Nishad and others under section 420 (Cheating) of the IPC as well as the Law on Price Tokens and Money Circulation Patterns (Prohibition).
Long Rich Technologies, Long Rich Trading and Long Rich Global, all based in Bengaluru, initially lured investors by saying they had an online education app. Morris coin was screened as their listed crypto coin with a cryptocurrency exchange.
In between, the alleged perpetrators also ran a Ponzi scheme. Many investors had contacted the police after the company stopped transferring the promised returns.
Sources said the people behind the program, including Nishad, had no financial training or diploma. They also refused to name the other suspects.
“They had front companies in Kerala, Tamil Nadu and Karnataka. They were suitors who boasted of their ties to celebrities of various walks of life and they attracted gullible investors with promotional events. They have no financial support. As our investigation is ongoing, at this point we cannot say more about anyone who has been associated with the crypto racket, ”a source said.
Nishad had left the country after obtaining early bail from the Kerala High Court in police cases.