India: Fourth Suspect Arrested Following Alleged $70+ Million Crypto Scam

Indian police have arrested an associate of a group accused of conducting a crypto scam involving 5 billion rupees (about $71.6 million), English-language local media The Indian Express reports Jan. 7.

This is the fourth arrest of the ongoing case and reportedly occurred a year after Thane police uncovered the alleged scam in Mumbai. The man, Rohit Kumar, has reportedly been arrested by Delhi police acting on a complaint from a Kanpur resident.

According to the police, Amit Lakhanpal — the man who launched the allegedly scam cryptocurrency — is the CEO of a real estate firm. The police also reportedly said that the token, dubbed Money Trade Coin (MTC), allegedly was never listed on a cryptocurrency exchange.

An unspecified police source, cited by The Indian Express, declared that “the accused had set up office in Delhi’s Vikram Nagar and used [it] to collect money from investors promising high returns.”

According to the police, the organization inflated the price of the token to prop investments. When the price of the token fell, investors were reportedly unable to sell them. A first information report from the police, registered Dec. 31, reportedly charges the accused with cheating, criminal conspiracy and banning.

According to reported police statements, Lakhanpal conducted events in Dubai that were attended by members of the royal family. Furthermore, an unnamed police officer reportedly claimed that “the accused also showed prospective clients an article in an international magazine, which claimed that one of the royals was his partner.”

As Cointelegraph recently reported, the police of the Indian state of Jammu and Kashmir issued a public statement warning the public against investing in cryptocurrencies.

In December, an government committee in India reportedly suggested that cryptocurrencies should be legalized in the country.

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India: Central Bank Report States Crypto Does Not Threaten Financial Stability

The Reserve Bank of India (RBI) has stated that cryptocurrencies currently pose no threat to financial stability in its recent financial report, published Dec. 28.

The document entitled “Report on Trend and Progress of Banking in India 2017-18” reads:

“[C]rypto-assets do not pose risks to global financial stability currently. The market continues to evolve rapidly, however, and this initial assessment could change if crypto-assets were to become more widely used or interconnected with the core of the regulated financial system.

RBI quoted a conclusion drawn from a recent report by the Financial Stability Board (FSB) — an international agency consisting of banking and financial institutions from different countries, including India. RBI itself is a member of the FSB, along with country’s Securities and Exchange Board and Ministry of Finance.

In its study “Crypto-asset markets: Potential channels for future financial stability implications,” published October, the FSB claimed that bankers see no significant danger in the existence of cryptocurrencies, as their total market cap by that time had barely reached 2 percent of the global value of gold. However, the board urged watchdogs to keep an eye on the digital coin markets, given their quick growth.

RBI reiterated this stance in its December report, stating that сryptocurrencies need “constant monitoring,” given their rapid expansion in recent years.

The legal framework for cryptocurrencies in India remains unclear, as RBI formally stopped all banks from dealing with cryptocurrencies in April. The de facto prohibition came into effect in June, while the Supreme Court’s hearings on the case — initiated by local crypto firms — were repeatedly postponed. At the same time, an Indian government panel is reportedly considering a complete ban on crypto.

Initially, RBI had considered launching its own central bank digital currency, dubbed “Laxmi.” However, in January, the bank gave up the idea of making a stablecoin tied to the rupee, stating that it’s too early to even think about it.

Yesterday, Jan. 3, the police of the Indian state of Jammu and Kashmir issued a statement, warning the public against investing in cryptocurrencies due to the “heightened risk” associated with them. The authorities also added that digital currencies are not regulated by the Indian government.

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India: Media Reports Central Bank Has Postponed ‘Crypto-Rupee’ Plans

The Reserve Bank of India (RBI) is pausing its plans to release a digital currency, Indian business news outlet the Hindu Business Line reported on Jan. 1.

India’s central bank had originally announced its intentions to consider a central bank digital currency (CBDC) in April of this year, at the time noting the establishment of an interdepartmental group to look into potential advantages and feasibility.

In August, RBI confirmed the creation of the group, specifying that it was researching a CBDC that would be backed the rupee for reasons including the cost of printing paper and the rising popularity of using digital tokens.

Now, amid confusion over the group’s exact findings, which remain a mystery, Delhi has apparently had a change of heart.

“The government doesn’t want the digital currency any more. It thinks it is too early to even think about a digital currency,” Hindu Business Line quotes an unidentified source as saying.

The hesitancy echoes that which the government displayed last week on the topic of cryptocurrency regulation. Non-CBDC assets such as Bitcoin (BTC) will remain in a gray area for the foreseeable future, one state minister told parliament, saying the issue was being approached with due caution.

Expectations had been that India would put some form of regulatory framework in place in 2018, amid anger over RBI’s ongoing ban on crypto transaction processing by banks.  

The government, meanwhile, continues to seek ways of reducing cash usage in India while attaching transactions to consumers’ biometric data via the Aadhaar scheme — reportedly the world’s biggest biometric ID system, which contains the records of more than one billion people.

Some parties appeared relieved at the shelving of the CBDC option.

“It is premature for RBI to launch crypto-rupee, as more understanding of the crypto economy need to be achieved,” local cryptocurrency exchange Belfrics founder Praveen Kumar told Hindu BusinessLine. He added:

“It is a right decision to delay the process and see how the publicly traded peer-to-peer economy is shaping up.”

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India's National Stock Exchange Trials Blockchain E-Voting for Listed Companies

The National Stock Exchange of India (NSE) is testing a blockchain platform developed by Elemential Labs to conduct e-voting for listed companies, local news outlet Hindu BusinessLine reports September 27.

The NSE’s pilot will entail tokenizing voting rights and using the blockchain platform to connect the firm, registrar and transfer agents (RTA), and the regulator. Hindu BusinessLine notes that tokenized votes are both easy to transfer and to proxy, and the test will reportedly be used to evaluate how easy it is to audit the entirety of the voting procedure using blockchain.

Sankarson Banerjee, CTO of projects at NSE, is quoted as saying that the blockchain system offers features that can bring the exchange “closer to an environment of improved corporate governance and compliance,” outlining that:

“The immutable nature of blockchain will ensure that every action taken by a network participant is transparent to the regulator. Additionally, the smart contract framework enables synchronisation of the vote count process between the company and the regulator in real time.”

Elemential Labs’ platform uses the Hyperledger framework, and NSE will reportedly take charge of developing and managing the front-end application of the system.

Elemential CEO Raunaq Vaisoha echoed Banerjee in advocating for blockchain’s power to ensure regulatory compliance in real time and to offer “highly transparent and clear corporate governance,” which he considered to be “an operating standard that most companies aspire to.”

As reported earlier this month, the Union Cabinet of India — the country’s chief decision-making body led by prime minister Narendra Modi — has approved a Memorandum of Understanding (MoU) with BRICS members on collaborative research into blockchain and other distributed ledger technologies (DLT).

This summer, the Indian state of Telangana announced it would be signing several MoUs with blockchain firms as to eventually implement the technology across government services.

As blockchain makes inroads with the country’s government, India’s Supreme Court is currently in the midst of reviewing the Reserve Bank of India (RBI)’s controversial ban on banks’ dealings with crypto-related entities. Just this week, the court listened to the final round of petitions on the ban, which has officially been in force since July 6.

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Hodler’s Digest: SEC May Make U-Turn on BTC ETF Rejections, While India and China Crack Down on Crypto Scammers

Coming every Sunday, the Hodler’s Digest will help you to track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions, and much more — a week on Cointelegraph in one link.

 

Top Stories This Week

SEC Rejects—Then Will Review—9 Bitcoin ETF Application

The U.S. Securities and Exchange Commission (SEC) has rejected a total of nine applications to list and trade various Bitcoin (BTC) exchange-traded funds (ETFs) from ProShares, Direxion, and GraniteShares. However, the SEC then noted that it will be reviewing its decision, which was based on the claim that the products did not comply with the requirements by the “Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

Clean Energy Researcher Claims Bitcoin Energy Consumption Isn’t That Bad

A clean energy expert has written an article explaining why she thinks that Bitcoin’s high energy consumption is not as bad as it is often made out to be. In her article, Katrina Kelly, strategy manager at the University of Pittsburgh’s Center for Energy, writes that we need to shift the debate around Bitcoin mining away from energy-intensivity focus instead on where that energy is produced and how it is generated. Kelly notes that although BTC mining consumed 30 terawatt hours in 2017, banking continues to consume an estimated 100 terawatts of power each year.

Chinese Police Arrest Hackers for Allegedly Stealing $87.3 Million in Crypto

Police in China have arrested three “highly experienced” hackers suspected of stealing up to 600 million yuan (around $87.3 million) in crypto. At the end of March, an individual with the surname Zhang filed a complaint with local police in the northwestern city of Xi’an, claiming that his computer had been hacked and BTC, ETH, and other crypto holdings worth up to $14.5 million stolen. The police hypothesize that the suspects had used a remote attack to transfer funds from Zhang’s computer without leaving a trace, in what is reportedly considered to be a “rare case.”

Indian Man Arrested for Allegedly Promoting Bitconnect Investment Scam

Indian police have arrested a man who was allegedly involved in promoting the Bitconnect investment scam. The suspect is reportedly the India head of Bitconnect, the high-yield investment program that stopped operating in January 2018 after coming under scrutiny for appearing to be a fraudulent Ponzi scheme. According to a recently filed Freedom of Information Report (FIR), this is the third case under investigation in India associated with Bitconnect. Local promoters of Bitconnect are alleged to have fled with 1.14 crore (11.4 million) rupees worth of Bitcoin from one investor.

Analysis Shows Bitcoin Cash Use in Commerce Has Decreased

A review of payments received by the world’s 17 largest crypto exchanges has shown that Bitcoin Cash (BCH) use in commerce has gone down, according to data from blockchain analytics firm Chainanalysis. They found that BCH payments dropped to $3.7 million in May from $10.5 million in March, while the volume of Bitcoin (BTC) payments was estimated $60 million in May, down from a high of $412 million in September. Chainalysis also noted that between 10,000 and 100,000 BCH are held by just two wallets.