India is ranked the world's top adopter of crypto, yet the country is struggling to curb the waves of crimes that come with the digital innovation.

Despite the country's stringent crypto tax policies and regulations, the number of crypto-related crimes in India has increased by a whopping 985% in the last five years.

From hacks to investment schemes, India is witnessing a rise in crypto-related crimes of several kinds. Just recently, India's cyberwing branch, Odisha, arrested five individuals connected to a large scale scam that defrauded a businessman of approximately $700,000.

Indian businessman lured by fat ROI

The elaborate scheme began in May 2024 when the victim, a businessman from Berhampur, was approached on Facebook by a woman claiming to be a Hong Kong-based software developer. She introduced him to the fraudulent trading platform and promised an eye-popping 200% return on his crypto investments.

Over the course of a month, the businessman deposited funds into a bogus platform called ZAIF, which is originally a reputable Japanese crypto exchange that fell victim to a $60 million hack in 2022. To gain the trust of the businessman, the initially fabricated profits to show the man that his investment was steadily growing .

However, when he attempted to withdraw his earnings, he was asked to pay an additional $107,000 as an advance fee to unlock his funds—a classic tactic in advance fee fraud schemes.

As he refused to pay the amount, the scammers took the next appropriate step-they vanished, and moved on to the next victim. Realizing he had been duped, he reported the incident to authorities, sparking an investigation that led to the arrest of the perpetrators in Surat, Gujarat.

Following the digital footprints left behind by the scammers, police were able to track down the suspects. Police later raided the scammer's homes, where they found incriminating evidence, including phones, SIM cards, ID documents, among many others.

The rise of crypto scams in India

This case is just one of the many cases of crypto-related scams that is rampant around India-a country experiencing rapid adoption of digital assets.

Days before Odisha authorities dismantled this scam, police busted another similar case in Assam involving the RSN Crypto scheme. This operation promised 2% daily returns and swindled over 2,000 investors. Investigators found that funds were quickly converted into USDT (Tether) and transferred through major exchanges like Binance. While three suspects were apprehended, but the mastermind behind the fraud is still scot-free.

Similarly, earlier this year, police uncovered the Datameer scam, which defrauded 70 investors out of $114,000. Another major fraud case, the HPZ Token scheme, involved 299 Chinese-linked entities, and resulted in multi-million-dollar losses.

These incidents highlight vulnerabilities within India’s largely unregulated crypto sector. Law enforcement agencies are ramping up efforts to combat fraudulent activities as scams continue to exploit unsuspecting investors.

India’s crypto boom brings about risks

India’s fascination with cryptocurrency is resulting in the rapid growth of the crypto landscape in the country as well as a slw of both legitimate trading and scam cases.

Despite stringent tax policies and regulatory uncertainties, trading volumes on local exchanges surged to $1.9 billion by late 2024. However, this growth has also fueled an uptick in scams targeting inexperienced traders.

Still, regulatory challenges persist as authorities work toward balancing innovation with investor protection.

Crack down on one of the largest crypto frauds in India

The crackdown on crypto fraud isn’t new in India. Last month, the Central Bureau of Investigation (CBI) launched nationwide raids tied to the infamous GainBitcoin Ponzi scheme—one of India’s largest crypto frauds. The scheme defrauded investors of an estimated $756.48 million between 2015 and 2016.

GainBitcoin was operated by brothers Amit and Ajay Bhardwaj, who lured investors by promising a 10% monthly returns through Bitcoin cloud contracts. But the scheme went burst just 18 months later when investors' funds dried up.

Authorities have since seized $2.75 million worth of crypto assets, multiple wallets, hard drives, and incriminating documents during the raids, with further investigation ongoing.

With India’s crypto market nearing $2 billion in value, regulatory hurdles remain significant. Although global guidelines were discussed during India’s G20 presidency last year, tax policies have not changed—posing barriers to mainstream adoption.

As scams proliferate alongside legitimate trading activities, Indian authorities are intensifying their crackdown on irregularities while striving to establish a robust framework governing cryptocurrency use.