AUTHOR: MUSKAN PARASHAR, A STUDENT AT MODY UNIVERSITY                                      


Crypto currency investment has been a topic of great interest in India, with the growing popularity of digital assets and block chain technology. However, alongside this enthusiasm, there has also been an increase in the concerns surrounding crypto currency scams. As the landscape of crypto scams continues to evolve, investors and the general public need to be well-informed about the potential risks and fraudulent activities in the crypto market.

In the midst of this, it is vital to shed light on the legal aspects of crypto currency investments in India and discuss the measures that can be taken to prevent investment fraud. This article aims to provide a comprehensive understanding of the crypto currency investment landscape in India, including the potential risks and regulatory measures in place to safeguard investors.

Understanding the dynamics of crypto currency investment within the legal framework of India will not only help investors make informed decisions but also contribute to the prevention of fraudulent activities in the crypto space.


Scams using crypto currency investments pose a serious legal risk to the digital finance industry. They entail dishonest practices in which people or groups trick others into purchasing fictitious or dangerous bitcoin assets. These frauds can seem as phishing attempts, Ponzi schemes, or phoney Initial Coin Offerings (ICOs).

In legal terms, schemes involving crypto currency investments are strictly prohibited and subject to penalties. Although specific rules and penalties vary significantly between jurisdictions, fraud, securities law offenses, and computer crimes are typically charged in these cases.

For example, the Securities and Exchange Commission (SEC) in the US has taken a firm stand against scams involving crypto currency investments. The businesses and persons implicated in these scams have been the target of multiple warnings and enforcement proceedings from the SEC.

In Europe, the European Securities and Markets Authority (ESMA) has also been aggressive in combatting crypto investment scams. In addition to taking action against phony initial coin offerings (ICOs), ESMA has warned investors about the dangers of investing in crypto currencies.

The problem, though, is going to be implementation. The decentralized and anonymous nature of crypto currency investment schemes makes it challenging for law authorities to find and apprehend the culprits. In addition, victims of these scams are frequently dispersed across several jurisdictions, which can make the legal process more difficult.

Despite these difficulties, it’s crucial to remember that numerous nations are working to control the crypto currency industry and shield investors from fraud. This entails fortifying legal frameworks, enhancing regulatory supervision, and raising public knowledge of the dangers of investing in crypto currencies.


Understanding the typical scam kinds and being aware of the warning indicators are necessary to identify crypto currency scams in India. They are drawn from a variety of sources:

  1. Common Types of Scams: Some of the most often reported crimes in India include forgeries, illegal financial transfers, cheating, and crypto currency scams. Often, scammers lead investors into their traps by promising large returns.
  2. Warning Signs: You should be aware of warning signals such as offers to get rich quickly, extensive marketing efforts, and guarantees of returns. Online scammers frequently begin by finding simple targets, and then craft appealing angles to attract them in. 
  3. Reporting Scams: You need to gather any relevant proof and notify the proper authorities if you believe there has been a crypto currency scam. You can report crypto currency frauds or scams to the Cybercrime webpage in India.
  4. Stay Informed: You must remain up with the most recent changes in the crypto currency market as well as the many kinds of frauds that are out there. This might assist you in making wise choices and preventing scammers from taking advantage of you.

Remember, while these methods can help you recognize and prevent crypto fraud, they are not failsafe. Always conduct thorough research and think about consulting a reliable financial counselor or industry expert for help.


Here are some recent cases on crypto investment scams in India:

Case Study 1: More than a year ago, a mobile store owner in Maharashtra’s Thane area lost Rs 36 lakh in a Bitcoin scam. Scammers misled him by making extravagant claims about the rewards of his investment.

Case Study 2: Several Indian investors trading on crypto currency platforms have been losing crores of rupees and falling prey to fraudsters who promise high returns. For instance, a couple in Bengaluru lost a substantial amount in a crypto trading scam.

Case Study 3: A website claiming to be selling a phony crypto currency called Morris coin allegedly scammed over 900 investors out of Rs 1,200 crore in a massive scam. They had put money into the currency because they thought it would be a wise investment.

Case Study 4: The Dekado Coin scam was a significant fraud in India, conducted by Divyesh Darji, Ranjeet Saxena, and their associates. They defrauded investors of a large sum after luring them in with promises of huge rewards. 


File a Complaint with Law Enforcement Agencies: The local police department or cybercrime unit are two law enforcement bodies that victims should report the scam to. They can offer information on the scam as well as any proof they have collected.

File a Complaint with the Economic Offenses Wing (EOW): An investigative division of the police dedicated to investigating economic crimes, such as crypto currency scams, is known as the EOW. To make a complaint, victims must provide the EOW with every relevant data and supporting documentation.

Approach the Reserve Bank of India (RBI): India’s national bank, the RBI, has released alerts regarding crypto currency scams. Victims who would like advice on the proper course of action can bring their complaints to the RBI.

Consult with a Lawyer: Victims who want to understand more about their legal rights and possible remedies may speak with a lawyer who focuses on financial fraud or cybercrime. Lawyers can assist victims in pursuing compensation by guiding them through the court system.

International Legal Options: If there is a foreign element to the scam, you may be able to pursue legal action in the scammer’s nation. For example, the US Federal Trade Commission (FTC) has a specialized unit that looks into crypto currency scams.


In India, crypto currency investment fraud has grown to be a serious problem as impulsive investors lose their hard-earned money to scammers. Several steps can be taken to stop such fraud. Firstly, crypto currency exchanges and investment platforms should be subject to strict laws and licensing criteria set by the government. This will guarantee that the market can only be used by reputable and lawful businesses. Public awareness campaigns should also be launched to inform people about the dangers of investing in crypto currencies and how to spot possible fraud. Financial institutions and regulatory agencies should also work together to create strong monitoring systems that can identify suspicious activity and quickly look into any fraud instances that are reported. India can prevent its citizens from becoming victims of crypto currency investment fraud by implementing these preventative steps.


India’s crypto currency investment market is expected to increase considerably in the next years. The nation is seeing a rise in interest in and use of crypto currencies despite early criticism and regulatory obstacles. The Reserve Bank of India’s recent move to eliminate the prohibition on trading crypto currencies has given investors and companies operating in the field new opportunities. The Indian government is also looking into the idea of establishing regulations to control crypto currencies, which would offer much-needed security for investors and clarity. We expect a rise in crypto currency investing activity in India as more people become aware of the advantages and opportunities presented by crypto currencies. This suggests that crypto currency investment in India has a bright future, especially when combined with technology breakthroughs and the growing adoption of digital currencies. However, to make wise investment decisions in this quickly changing market, investors must use caution, perform in-depth research, and keep up with the most recent advancements.


In conclusion, unwary investors face a serious risk from crypto currency investment scams in India. The dynamic characteristics of crypto currencies combined with an absence of comprehensive laws promote an atmosphere that is conducive to fraud. Before making any crypto currency investments, people should proceed with extreme caution and careful research. To identify and stop scams, regulatory bodies must also work harder to impose stronger laws, license trustworthy platforms, and work with financial institutions. Prioritizing public awareness campaigns and educational programs can provide individuals with the necessary knowledge and abilities to recognize potential fraudulent activities. India can reduce the risks connected to crypto currency investment scams and shield its citizens from monetary losses by implementing these preventative steps.

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