Pakistan: Binance Arrested By Regulators As Mobile Ponzi Apps Surface

The cybercrime division of Pakistan’s Federal Investigation Agency (FIA) issued a notice to crypto exchange Binance as it investigated a scam, local media reported.

Notably, reports that the FIA ​​also requested the presence of Hamza Khan, CEO / Growth Analyst of Binance Pakistan, to explain the company’s position. A statement issued in this case noted,

“A relevant questionnaire was also sent to [the] Binance Headquarters [in] the Cayman Islands and Binance US to explain the same.

The move comes against a backdrop of increasing investment fraud, especially Ponzi schemes that promise very high returns to Pakistanis, the agency noted.

“These plans benefit old clients at the expense of new clients and end up disappearing when they have done [a] a substantial capital base worth billions of rupees.

Scope of the scam

Here, the crypto scam in question is estimated to be worth nearly $ 100 million. It was also revealed in December after several complaints. The watchdog said at least 11 mobile apps have been identified that “defrauded billions of rupees” including names like MCX, HFC, HTFOX, FXCOPY, OKIMINI, and more. The FIA ​​further explained,

“The modus operandi of these apps was to require people to register with Binance Crypto Exchange (Binance Holdings Limited) […] the next step was to transfer money from the Binance wallet to the account of that particular app.

Therefore, Binance will have to “provide conditions, official supporting documents, a mechanism for integrating these APIs (applications)”. That being said, the FIA ​​also considers Binance to be the “largest unregulated virtual currency exchange office” in the country with millions of dollars invested.

But it goes further, as many Pakistanis, who were registered members, have reportedly been added to Telegram groups where anonymous administrators were reporting investment bets. And, by the end of the Ponzi schemes, apps would have crashed, robbing people of their invested money. The agency also said that each program has an average of 5,000 clients with,

“The reported investment range per person ranged from $ 100 to $ 80,000 with an estimated average of $ 2,000 per person, making the scam estimated at nearly $ 100 million.”

Binance’s regulatory issues

Once the scam is identified, all Pakistani bank accounts linked to such apps are subject to a “debit block”, according to the report. The statement says,

“At least 26 suspicious blockchain wallet addresses [Binance wallet address] have been identified where a fraudulent amount may have been transferred. A letter has been written to Binance Holdings Limited giving the details of these blockchain wallet accounts as well as blocking them.

In addition, social media influencers who have promoted these apps should also receive legal opinions from the FIA ​​to “explain their point of contact with the apps”. However, Binance’s regulatory issues do not appear to be easing, as the statement covered by Dawn also noted,

“FIA Cyber ​​Crime Sindh has started to closely monitor Pakistani peer-to-peer transactions on Binance in order to reduce the threat of terrorist financing and money laundering as Binance is the largest platform -Easy to use shape facilitating such activities. . “

The agency says that in case of Binance non-compliance, the FIA ​​can impose financial sanctions on the exchange through the State Bank of Pakistan.

Pakistan’s crypto reserves

Recently, it was estimated that Pakistan is already sitting on cryptocurrency purchases worth $ 50 million made in the past six months. With the estimate of the Pakistan Federation Chamber of Commerce and Industry,

“Pakistan recorded approximately $ 20 billion in cryptocurrency value in 2020-2021, showing an anomalous increase of 711%.”

Casey J. Nelson