The Federal Investigation Agency (FIA) is now investigating a $100 million (Rs. 17.68 billion) scam involving 11 Binance-linked apps. Its been named ‘Operation Cyber Storm,’ which is being spearheaded by Imran Riaz Head of FIA Sindh.
To kick start the investigation many acute steps have been taken.
Hamza Khan, General Manager/Growth Analyst Binance Pakistan (Crypto Currency Exchange), has been summoned by the FIA Cyber Crime Sindh to explain his viewpoint on the connectivity of fraudulent online investing mobile applications with Binance. To explain the situation, a questionnaire has been issued to Binance Headquarters in the Cayman Islands and Binance US.
In addition, all the Pakistani Bank accounts linked to such apps have been debit blocked. Social media influencers, promoting these apps, are being served with legal notices to explain their point of contact with apps. Also, at least 26, suspect blockchain wallet addresses (Binance wallet address) have been identified where fraudulent amount may have been transferred. Letter has been written to Binance Holdings Limited to give details of these block chain wallet accounts as well as debit block them. Telegram, a messaging service, is being contacted to provide the whereabouts of admins of fraudulent apps.
According to a press release, many internet investment scams have recently surfaced in Pakistan, based on the Ponzi Scheme model, in which investors are promised unrealistically huge returns on their investment if they bring in additional consumers. These scams enrich existing clients at the expense of prospective clients, and the scammers eventually vanish after amassing a large cash base worth billions of rupees.
Earlier, people from all around Pakistan began contacting the FIA Cyber Crime Wing (Sindh) via social media in the end of last year, reporting at least 11 mobile applications, including MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK, and 91fp. They stated that these programmes had stopped working over time, causing billions of rupees in losses to the Pakistani people.
The goal of these applications was to get individuals to sign up for Binance Crypto Exchange (Binance Holdings Limited), which allows people to trade virtual currencies including Bitcoin, Ethereum, Dogecoin, and others. The following step was to transfer funds from Binance Wallet to the application’s account.
At the same time, all participants were added to Telegram groups, a heavily encrypted instant messaging service where the anonymous owner of the application and admins of the Telegram groups provided so-called expert betting indications on the rise and fall of Bitcoin. These apps fell after a significant capital base had been developed, defrauding users of millions of dollars through a ‘Referral Bonus Process.’
Credit cards and bank accounts used to trade cryptocurrencies have been frozen by the Financial Investigation Authority (FIA).
According to the investigation’s first results, each of the aforementioned applications had an average of 5,000 clients, with HFC having a maximum of 30,000. The alleged investment ranged from $100 to $80,000 per individual, with an estimated average of $2,000 per person, putting the total swindle at approximately $100 million.
It’s worth noting that Binance is the world’s largest unregulated virtual currency exchange, with Pakistanis investing millions of dollars there. Because Binance is the largest easy-to-use platform allowing such operations, the FIA Cyber Crime Sindh has begun taking steps to keep a close check on peer-to-peer transactions done by Pakistanis on Binance in order to combat the threat of terror funding and money laundering.
Binance is expected to take a flexible and quick approach in assisting Pakistan in tracking all of these financial crimes, according to the FIA Cyber Crime. In the event of noncompliance, the Financial Intelligence Agency Cyber Crime will be justified in recommending financial sanctions against Binance through the State Bank of Pakistan.
