Cryptocurrency mining scam run via app busted in Bengaluru

Four people associated with a now-defunct cryptocurrency investment app have been arrested by the city police for cheating dozens of people. But two kingpins, both foreigners, remain at large.

The scam started with the launch of the ShareHash app on Google Play last year. The app was installed by more than 50,000 people until the promoters pulled the plug on it in January this year.

The app offered cloud mining, which refers to a mechanism to mine a cryptocurrency, such as bitcoin, using rented cloud computing power and without having to install and directly run the hardware and related software. It allowed people to open an account and remotely participate in the process of cryptocurrency mining for a fee.

The app also offered users Nebra Helium Hotspot Miners (HNT), another cryptocurrency mining service.

The app’s founders launched an online hunt for local residents who could act as fronts for shell companies and in whose names bank accounts could be opened. Those who signed up and gave their personal details were offered Rs 50,000 to Rs 75,000 each.

In all, the gang opened five primary bank accounts of as many companies linked to the ShareHash app (see box). All the companies were registered in 2020-2021 with mechanics, drivers and painters as their directors. Without their knowledge, crores of rupees were transacted in the bank accounts, a senior police officer said.

These companies then launched a promotional campaign by sending bulk messages via SMS and WhatsApp. The deal was incredibly attractive — up to 45% returns on daily investments. To sweeten the deal, users were also offered instant withdrawals.

Promotional gimmick

In another promotional gimmick, the gang offered to sell the cryptocurrency mining machine that would “fetch investors even higher returns”.

The gang initially paid the returns to gain the users’ confidence. Some people, who received high returns on initial investments of Rs 2,000, ended up investing more. Many people put in anywhere between Rs 2 lakh and Rs 20 lakh.

In January 2022, the gang announced the closure of the ShareHash app citing technical issues but promised to come up with the ShareHash 2.0 app shortly. To avoid any suspicions, they asked people to invest before the app launch and become prime members, who get higher returns. Many fell into this trap as they invested Rs 5 lakh to Rs 50 lakh.

The Central Crime Branch (CCB) went after the gang following a complaint from one of the investors, a JP Nagar resident named Rajiv B S.

In his police complaint on January 21, Rajiv, 46, stated that he and his friends, Adarsh Sanjeev N, Sudheer T S, Venkatesh Devaraj, Harsha U V, Manoj Kumar B M and K Harish Kumar, were cheated after investing through the app. Between August last year and January 18 this year, the group invested Rs 76 lakh.

CCB inspector B S Ashok and his team arrested Zabihulla Khan, Rehmathulla Khan, Imran Riyaz and Sheetal Bastwad, all four residents of Bengaluru. Besides Rs 78 lakh in cash and 1.65 kg of gold, the CCB has frozen Rs 15 crore worth of bank balance belonging to the gang.

According to the CCB, Bastwad, who is studying to be a chartered accountant, worked as the company secretary, opening bank accounts and arranging digital signatures, seals and stamps. The kingpins, Jimmy and Stacy, are at large, according to the CCB.

The shell companies

Cotata Technology Pvt Ltd (Directors: Jever Praveen and Krishna Suhas)

Crampington Technology Pvt Ltd

Siraleen Tech Solutions Pvt Ltd (Directors: Murali and Imran Riyaz)

Nileen Infotech Pvt Ltd (Directors: Zabiulla Khan and Radhakrishna Srikanth)

Moltres Exim Pvt Ltd

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