An international syndicate of debit card cloners was recently busted in India and investigations revealed that bitcoin was used in their transactions. As it turns out, the gang siphoned money out of ATM machines using these cloned cards then converted the funds to bitcoin before being distributed to its members.
One of the key attributes of bitcoin is its pseudo-anonymity, as transactions are validated using complex algorithms and cannot always be traced back to any identities. This has been one of the reasons why the cryptocurrency has typically been tapped by scammers or hackers, as this makes it slightly difficult for authorities to track down perpetrators.
Gang Members in Mumbai and Dubai
The gang involved was found active in Mumbai after several complaints were filed in Gujarat, Andhra Pradesh and some southern states, but the funds were actually being sent to Dubai. Authorities said that the money converted through bitcoin was transferred to Dubai-based Sumair Sheikh through a hawala operator.
Hawala, also known as hundi, is an informal system of transferring funds that involves a huge network of money brokers. This is prevalent in the Middle East, North Africa, and India in which they operate outside of conventional forms of banking and finance.
Through this system, a person that wants to send funds to another person abroad approaches a hawala broker or hawaladar to give the money and specify a password or code that can allow the recipient to receive the funds. But instead of actually moving the funds from one location to another, the broker simply contacts another hawaladar in the recipient’s location to coordinate the transfer.
It was this system that ultimately allowed authorities to bust the gang members, as Mumbai and Delhi police obtained information from local hawala operator, Pankaj Bhardwaj, a resident of Uttar Pradesh’s Ghaziabad district. After being apprehended and upon interrogation, he confessed that he used to receive an amount sent by another gang member Nasir Ansari before converting them to bitcoin and making an online transfer to Sumair in Dubai.
As it turns out, Bhardwaj was an operations manager of a bitcoin trading firm CoinSecure, which explains his knowledge of the cryptocurrency and its potential use for fraudulent activity. Nasir Ansari was arrested withdrawing money from a Dadar ATM, leading Mumbai police to recover more than 20 cloned ATM cards.
Bhardwaj also admitted to having sent bitcoin amounting to roughly Rs 30 lakh or $45,000.00 to Sheikh in the past four or five months. Police also recovered cash amounting to Rs 8 lakh or $12,000 in Bhardwaj’s house.
CoinSecure meanwhile clarified that it had no role in Bhardwaj’s unlawful activities, and removed him immediately upon finding out about his shady conducts. An excerpt from their blogpost published today stated:
“While Pankaj, had an impeccable reputation in terms of his integrity in trades, it has recently been established that he has been involved in several trades that were subject to question. Post a brief absence, we found out through media sources that Pankaj was in question for these trades by the authorities. These trades were done on his personal front with no involvement with the company and that has been ascertained by the authorities.”
Bitcoin in India
To this date, authorities in India have been unsure about bitcoin, as the police claimed that the Reserve Bank of India deemed the trade and use of virtual currencies as a medium for payment as illegal.
Even so, India has roughly 50,000 bitcoin enthusiasts with around 30,000 actually owning the cryptocurrency, according to a report published last year. These recent arrests and investigations, however, might lead to a stricter stance among authorities for bitcoin users and companies alike.
Earlier, RBI Governor Raghuram Rajan had said that Bitcoin would help creating a cashless society, as they become better and safer in future.
