The accused were running a Ponzi Scheme wherein the members would get commissions for bringing more subscribers.
The Central Crime Branch (CCB) has uncovered a Ponzi Scheme running in Bengaluru that promised investors an attractive rate of return, according to an article by The Indian Express.
On Sunday, three persons accused of running the scheme were arrested. They are identified as Raghavendra, Nagaraju and Shivamurthy; all reside in HSR Layout.
An official revealed that they were running a firm named FOMOEX from a private hotel in Yelahanka and also claimed to have branches in the USA, Singapore, and China.
“The economic offences wing detected another Ponzi scheme/chain-link scheme in HSR Layout… (they) promised more than 20 per cent returns and assured higher returns on getting additional members. Further investigation is on.”
Sandeep Patil, Joint Commissioner of Police (Crime)
The accused were using the “Chain-link Model” through which existing members would bring in more subscribers and get a commission for it. It is similar to the classic Pyramid or Multi-level Marketing Scheme.
The Reserve Bank of India (RBI) has cautioned the general public about such schemes in the past.
As per a circular issued by RBI in 2015, “acceptance of money under Money Circulation/Multi-level Marketing/Pyramid structures is a cognizable offence under the Prize Chit and Money Circulation (Banning) Act 1978. Members of public coming across such offers should immediately lodge a complaint with the State Police.”
Any investment scheme should be verified from proper channels, before availing. Government has several provisions for doing so. Moreover, crypto companies in India are exercising self-regulation through industry associations like the Blockchain and Crypto Assets Council (BACC). These organisations are always ready to help anyone.
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