Federal Investigation Agency in Pakistan announced on Friday that it had issued a warning to a renowned cryptocurrency exchange while probing a multi-million dollar scam connected to bogus mobile investment apps.
Hamza Khan, Binance Pakistan’s general manager, has been given an order of attendance to explain his company’s connection to “fraudulent online investment mobile apps,” according to a news release from FIA’s Cyber Wing (Sindh).
According to the agency, the inquiry was launched to investigate a series of online investment scams happening in Pakistan under the pretext of Ponzi schemes, in which naive investors are promised significant returns on their money in exchange for bringing in other customers.
Binance has taken Pakistan by storm since its arrival in January 2019. The exchange has seen a sharp rise in trading volume and became the “largest unregulated virtual currency exchange” where Pakistanis are investing millions of dollars.
The agency received multiple complaints from citizens around the nation on December 20 last year, alleging that they had lost billions of rupees while using specific mobile applications.
Binance is an exchange that has been accused of operating an unregulated exchange and facilitating illegal activities such as money laundering and terrorism financing by the US Government. The company has also faced scrutiny for its unclear accounting practices and lack of transparency.
According to the FIA, these apps enticed users to register at Binance Crypto Exchange (Binance Holdings Limited) and then transfer funds from their Binance Wallet to the application’s account.
Simultaneously, all users of the group were joined to Telegram groups where professional betting indications on the rise and fall of Bitcoin were provided by the application’s anonymous owner and administrators of the Telegram groups.
According to the report, these applications collapsed after a significant capital base had been formed, depriving consumers of millions of dollars through the “referral bonus mechanism,” according to the report.
The FIA reported that each app had an average of 5,000 subscribers, with HFC app boasting the highest client base of 30,000.