Indian Crypto Investment Ponzi Scheme Targeting Muslims Crumbles After Country Makes Crypto Illegal Tender


Indian Ponzi Scheme Crumbles After Country’s Announcement Of Crypto As Illegal Tender

India’s financial regulatory body’s recent announcement of cryptocurrency as “illegal tender” has crashed an Indian Ponzi scheme operation. Following the Reserve Bank of India’s recent announcement that cryptocurrency isn’t a legal tender in the country, Ambidant Marketing and Investment Company crashed.

The company which is operated by Fareed and Ahmed Syed –father and son- was able to attract investors through its promise of Halal investments. This way, it was considered a sharia based investment initiative by conservative muslims who felt it as an investment program in line with the dictates of Islam.

Interestingly, because of the trust placed in them by the investors, the company never declared its crypto investment proceeds or income.

Scammy Practices

Reports by various sources indicate that the firm hid under the cover of Halal investments, and got many muslims to get on board the program. These investors were lured with huge promised returns –some as high as 50 percent ROI monthly.

So, for every lakh rupee (about $275) that was invested with the company, the investors were supposed to enjoy a $137.5 return every single month. This was an attractive and irresistible offer for many investors, some of whom pulled together their life savings to invest in the crypto investment.

As part of its marketing strategies, the company also used Ulemas to further sell its services and investment programs as Halal. This strategy worked, resulting in more muslims joining the program.

In typical Ponzi fashion, the first and second set of investors were able to consistently get the promised returns. As a result, word spread very quickly, and more investors piled on. The company was able to consistently make these returns by reinvesting the fortune they made from the initial trades.

However, as the scheme got bigger and more people invested in it, the scheme reduced its payout by 50 percent, thus paying investors just 25 percent ROI. This was followed shortly by 11 percent, and then 9 percent, which was its last payout in January of 2018.

The company did pay many investors, many of whom were able to earn 100 percent returns on their monies invested. As a result, investors who benefited saw payouts between Rs 50,000 and Rs 1 Crore. That’s between $685 and about $138,000 during the period that the program was active.

What Happened After The Announcement

Pursuant to the Reserve Bank of India’s announcement of cryptos as illegal tender, the country’s enforcement agency, swooped into action, and started investigating all crypto related organizations in the country.

Ambidant unfortunately, was one of the four thousand companies that were under the surveillance and investigation, to the surprise of its investors who didn’t even know that they were investing in cryptocurrencies.

According to a statement released by the Enforcement Directorate,

“During the investigation, it came to the fore that the scheme run by the company is surely a potential Ponzi scheme. In view of the above, ED has written to the RBI (Reserve Bank of India) to have another look into the matter and protect the interest of the investors/depositors at large who are being duped in the name of Islamic banking/halal investment.”

Was The Scheme In Contravention Of The Sharia Law?

Not just that, apart from tricking investors to part with their monies, the company’s actions were actually in direct contravention of the Sharia law.

According to a few Islamic scholars, cryptocurrency trading and investing contravenes the Sharia law, and isn’t Halal, largely because cryptos are neither supported by the government nor have any tangible value.

These two conditions are often a prerequisite to a currency under the sharia law. So, the absence of these implies that the investment program had no religious backing, neither were they in keeping with the tenets of islam.

However, these were just the opinions of a few Islamic scholars. So far, it appears that the subject matter is quite controversial with some stating that crypto investing isn’t in contravention of the sharia law, or disrespectful to islam.

One of these is Mufti Muhammad Abu Bakar, a Sharia adviser and compliance officer at Blossom Finance in Jakarta, Indonesia who published a paper classifying Bitcoin as Halal. This paper alone, resulted in bitcoin’s price appreciating by $1,000 in the country.

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