Mumbai police have registered a case against Ravi Mahaseth, the managing director of cryptocurrency trading platform Coin ZX, for allegedly defrauding investors of $23 million (Rs 200 crore).
Mahaseth, who is now based in Dubai, is accused of luring investors into a fake cryptocurrency scheme with promises of high returns. Five other individuals linked to the scam have also been booked.
Mumbai Police Book Coin ZX Managing Director in $23 Million Crypto Scam
According to police, victims from across India were deceived into investing in Coin ZX. The investigation began after a 50-year-old businessman from Borivali, Mumbai, filed a complaint.
He was introduced to the scheme by a friend who claimed investors were earning 5% to 20% monthly returns. Encouraged by the promise of substantial profits, the businessman invested his money, only to later discover that Mahaseth had fled to Dubai.
How did the Scam work?
Coin ZX reportedly presented itself as a legitimate cryptocurrency project, claiming to be India’s answer to Bitcoin. Investors were promised that their money would be used to trade Bitcoin and other digital assets, with guaranteed profits after six months.
To gain trust, Mahaseth highlighted his connections to forex trading and his involvement in other companies such as FX & Smart Bull, Smart X, and Samruddhi Multi Trade Pvt Ltd.
The scheme followed a typical multi-level marketing (MLM) structure. Investors were encouraged to bring in new participants, and early investors initially received returns to create the illusion of legitimacy.
A 25-year-old investor, Mohammad Arif, told authorities that he attended a seminar on Coin ZX and invested $5,000 after being convinced by company representatives. Initially, he was able to withdraw returns, but after four months, the payments stopped.
Coin ZX then blamed “technical issues” for the halted withdrawals. Many investors, believing the company’s reassurances, put in even larger amounts. Some invested between $1,150 and $13,800 (Rs 1 lakh to Rs 12 lakh), hoping for bigger returns.
Red Flags Ignored
Investigators have found multiple warning signs that investors overlooked. One major red flag was that Coin ZX only accepted cash investments.
When questioned, Mahaseth reportedly told investors that digital currency transactions were not fully established in India, which is why cash deposits were required.
Additionally, the company operated a fake website where investors were given login credentials to view their supposed cryptocurrency holdings. This created the illusion that their investments were growing, even though no real transactions were taking place.
As complaints about the company increased, Mahaseth reassured investors that their funds were safe. In March 2023, when concerns mounted, he told investors that returns would be issued at the end of 2024.
However, as time passed, he continued to delay payments before eventually shutting down Coin ZX’s Mumbai office and fleeing to Dubai.
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Legal Action and Investigation
The businessman who filed the complaint at Kasturba Marg police station decided to act after learning of Mahaseth’s escape. Mumbai police have now registered a case under sections related to cheating and common intention.
Meanwhile, authorities in Hyderabad had already filed a separate case against Mahaseth just two weeks ago, as the scam affected people nationwide.
The investigation is ongoing, with police working to trace other assets linked to the scam. Authorities are also looking into whether Mahaseth’s associates played a larger role in the fraud.
A Pattern of High-Profile Crypto Scams
The Coin ZX case is just one of many high-profile cryptocurrency scams in recent years. Several prominent figures in the crypto industry have faced legal troubles after allegedly defrauding investors.
Interpol recently issued a red notice against Richard James Schueler, also known as Richard Heart, the founder of Hex and PulseChain. He is accused of misleading investors and misusing funds raised through his crypto ventures.
Like Mahaseth, Schueler gained investor trust by promising lucrative returns but is now under investigation for fraudulent activities.
The rise of cryptocurrency has also led to a rise in scams, with many projects collapsing due to poor management, fraudulent practices, or outright theft. Investors are advised to exercise extreme caution, conduct thorough research, and avoid schemes that guarantee unrealistic profits.
The Coin ZX scam comes at a time when India’s regulatory landscape for cryptocurrency remains uncertain. While the government has taken steps to impose taxation on crypto transactions, there is still no clear legal framework governing digital assets.
Also Read: U.S. Leaders Responsible For 43% Of Global Crypto Scams And Dead Projects: Report