Account freeze: Crypto dealer turns detective to clear his name in scam, Kerala police ignores evidence

Kozhikode: Michael MK* (30), a crypto trader from Palakkad, has been in hiding since February. He is not running from the law. He avoids the relatives from whom he had generously borrowed to trade cryptocurrencies.

But the cyber police of Kerala and Telangana threw a spanner in his work by freezing his bank accounts of around Rs 8 lakh. They accused him of accepting impure rupees and selling cryptocurrencies.

Online fraudsters often convert their poor rupees into cryptocurrencies. But Indian cyber police are doing a U-turn and are following the rupee held by honest traders, said Abdul Jabbar VH, a cyber activist representing several victims of arbitrary bank account freezing in Kerala.

It is a misconception that crypto trading is opaque. Cryptocurrencies are digital assets and their trading is transparent. “Crypto exchanges like Binance have made it mandatory for traders to submit KYC before they can buy or sell coins,” he said. So, if fraudsters buy cryptocurrency from a genuine seller using their money, the police have access to their photographs, PAN, Aadhaar, bank account details, mobile number and email ID. “With all these documents and details, if the police cannot catch the online fraudsters, it is a telling comment on their incompetence or they just don’t want to,” said Jabbar, a native of Malappuram.

The cases against Michael (*name changed upon request and to protect identities) reveal the lack of coordination among India’s cybercrime investigators and possibly their reluctance to follow the trail of cryptocurrencies. The unhelpful police also turned Michael and Jabbar into investigators.

Read Part 1 of the Freeze and Fleeze Scam Series here: Freeze, You’re Being Demonetized by Police, Banks

Crypto dealer goes after scammers

On February 13, Smitha Janet* of Thiruvananthapuram filed a complaint with the National Cyber ​​Crime Reporting Portal saying three people duped her of Rs 1.3 lakh. The rocket lured her into a scam on Telegram by sending her a link to her WhatsApp number.

Janet was initially required to pay a small amount and complete a small task such as liking a Youtube video. After completing the task, the scammers would return her slightly more money than what she gave them. At the next level, she had to pay more to participate in the game. Again, she got more than she gave them.

This continued until her trust in the scammers grew and she ended up losing Rs 1.3 lakh.

In her complaint, Janet named three suspects and provided their phone numbers: Ishant Kaushish (93025 96279), Kushi (78997 50186) and Kavitha Sharma (79006 63669). She also shared the UPI numbers to which she transferred the money.

The national portal transferred the case to the cyber crime police in Thiruvananthapuram. During the investigation, the police found that a bank account linked to the scam had transferred Rs 5 lakh to Michael’s ICICI bank account in Palakkad on February 11.

On the same day, Michael transferred Rs 1.3 lakh to the Union Bank of India account of his friend Nagma Fahisa* and around Rs 1 lakh each to three other accounts. At the end of that day, Michael’s account had Rs 70,000.

The online police chose to freeze the accounts of Michael and Fahisa. They marked Rs 70,000 in Michael’s account and Rs 60,500 in Fahisa’s account as a disputed amount or lien. Jabbar said he did not know how police determined the proportion of the disputed amount in the accounting.

Nevertheless, when Michael came to know that his ICICI bank account was frozen, he produced evidence that he sold a crypto amount worth Rs 5 lakh to one Pasad Rakesh Bhawanji on the Binance platform.

But the cyber police wanted nothing to do with cryptocurrency and ignored the important evidence.

With little help from the Thiruvananthapuram Cyber ​​Police, Michael and Jabbar contacted Janet, the original complainant, and got the name and phone numbers of the suspect. They continued to trawl the internet for the suspects.

“On the internet, I came across phone numbers that were flagged as spam. I also found their usernames on Telegram,” Jabbar said.

On March 4, the hard-line trawling should pay dividends. Jabbar came across a news report on The Times of India that the Ahmedabad Cybercrime police arrested three people for duping a 35-year-old Chandkheda man of nearly Rs 17 lakh using the same fraud model.

The accused were from Rajasthan and their names were Rajkumar Yadav, Farooq Hussain and Imran Mansuri. The names were not what Janet had mentioned in her complaint. But Jabbar had a clue and he downloaded the FIR in connection with the case and he was stunned.

In the FIR filed by the Chandkheda man, he had mentioned Ishant Kaushish and Khushi, and their phone numbers. “They matched Janet’s complaint. What I found interesting was that the fraudsters conned Janet and the Chandkheda man around the same time,” Jabbar said.

An excited Jabbar rushed to the Thiruvananthapuram cyber crime police station with his discovery. “The officers were not only cold to my findings, they didn’t even know that the suspect in their case was arrested by the Ahmedabad cyber crime police. So much for the national cyber crime portal,” he said.

The Thiruvananthapuram police also refused to lift the freeze on Michael’s account.

Crypto traders are soft and easy targets

Abdulla Varikkodan (42), a manager at an American candy company in Dubai, is bitterly disappointed with the cybercrime investigators in India. Despite being too careful with his crypto trading, Indian cyber police on Friday flagged Rs 7,256 reaching his wife’s ICICI bank account in Malappuram. “I don’t know what more precautions I should take. Their method of investigation will make people wary of digital transactions,” said a frustrated Abdulla.

Almost four months ago, Binance, the world’s largest cryptocurrency exchange, froze Abdulla’s account with the platform after a Tamil Nadu-based crypto trader accused him of using “tainted” Rs 70,000 for trading.

Abdulla was holding stablecoin (USDT) worth Rs 35 lakh on the platform when his account was frozen. He had built up his savings by investing half of his salary in cryptocurrency every month. “Now I am cut off from my money for a crime I had no part in,” he told Onmanorama on the phone from Dubai.

Back home, the Federal Bank’s Malappuram branch marked Rs 70,000 as the disputed amount (aka lien).

Cyber ​​police officers said they would follow the dirty money and withhold the disputed amount on the one found, until the investigation is complete.

But this method of investigation is ruining the lives of many as the police often freeze anywhere between 50 and 100 or more accounts over one online complaint. In several cases, the police lift the freeze after taking bribes.

Although cryptocurrencies are traceable, police only follow government-issued currencies, said several crypto traders whose bank accounts were frozen.

How Abdulla’s crypto world crumbled

On December 8, 2022, his friend Mohammed transferred Rs 70,000 to Abdulla Varikkodan’s account in Federal Bank’s Malappuram branch. The same day, he used the money to buy Rs 70,000 worth of USDT from the Tamil Nadu-based seller on the Binance crypto exchange.

USDT or Tether is a stablecoin or digital coin backed by a stable asset (in this case the US dollar). Crypto traders use stablecoins to stay in the crypto system and buy and sell any form of cryptocurrency on any platform. The stablecoin’s value will be almost the same as the asset it is linked to. So one dollar can be exchanged for one token of Tether.

A week after the transaction, the bank account of the Tamil Nadu-based crypto trader was frozen because the Uttar Pradesh cyber crime police found that the Rs 70,000 he received from Abdulla was part of an online scam.

He filed a complaint with Binance saying Abdulla was using dirty money to trade. On December 14, Binance froze Abdulla’s account with USDT 42,856 (approx. Rs 35 lakh).

Abdulla said he got the money from his friend Mohammed, who got the money from crypto trading.

How accounts are frozen

Kerala cyber crime nodal officer Shaji Sugunan said Onmanorama that his cybercrime police team ensured that only the disputed amount or lien was withheld and that the bank accounts were not frozen.

When an online financial fraud is reported on the National Cyber ​​Crime Reporting Portal, it is forwarded to the appropriate state cyber team. “We are initiating the investigation and informing the bank which was primarily used to commit the crime,” the IPS officer said.

The bank then tracks the movement of the money. The instruction is to withhold the lien so as not to freeze the account, he said.

If the primary bank finds that the proceeds of the alleged crime have been moved to accounts in other banks, it will update the information on the national portal. The banks mentioned by the primary bank will then pick up the trail and the tracking will continue until the last rupee involved is frozen, Sugunan said.

Banks can also directly inform the cybercrime police, who investigate the matter. “We freeze the account or withhold the lien as directed by the police,” said Amith Kumar, vice president of Federal Bank.

Even if an account is debit frozen, the banks charge their fees and penalties.

If an account is named or involved in more than one or two cases, the investigating officer orders the banks to freeze the accounts.

Once the accounts are frozen, he will ask the recipients to explain the source of the money. “If they have a convincing answer, the freeze on the lien or account will be lifted,” Sugunan said.

“Not many crypto cases in Kerala”

Asked about the impasse faced by investigators after cryptocurrencies, Sugunan said only a small number of cases involving digital currencies have been reported from Kerala.

He said his team was monitoring the bank’s freezing activities and cyber crime every day. “If the frozen amount exceeded the mortgage amount, we identify the accounts and ask the banks to lift the freeze,” he said.

But the reality is that Kerala is no different from states in the north. A university student from Madhya Pradesh, who is interested in cryptocurrencies, hired cybercrime lawyer Jiyas Jamal after his account was frozen by the Palakkad Cyber ​​Crime Police. “I contacted the Palakkad cyber crime team and they said they did not ask the bank to freeze the account. “I am moving the high court to find out who is responsible for freezing the accounts,” he said.

This is the second of a three-part series on banks and police arbitrarily freezing accounts to investigate online fraud.

Read part 1 here: Freeze, you are demonetized by police, banks

Tomorrow: How victims lean on courts, regulators to save them