Pakistan to investigate Binance for multi-million dollar crypto scam

Pakistan to investigate Binance for multi-million dollar crypto scam

According to reports, the Federal Investigation Agency of Pakistan (FIA), issued a notice to Binance crypto exchange in an attempt to find links to a multi-million dollar crypto scam in the area.

After receiving many complaints about a scam that allowed investors to send money from Binance wallets into unknown third-party wallets, the government of Pakistan launched a criminal investigation. Local coverage reports that the FIA’s Cyber Crime Wing issued an order for attendance to Binance Pakistan GM Hamza Khan in order to determine the exchange’s connection to “fraudulent online investments mobile apps.”

KARACHI: Federal Investigation Agency (FIA) has detected an online fraud of Rs100 billion using a cryptocurrency and issued notice to the local representative of Binance, @cz_binance @binance @BinanceHelpDesk @BinanceUS pic.twitter.com/3oukwzmDqh
— Innocent Pashteen (@FighterDawar), January 7, 2022

The notice stated that a questionnaire was sent to Binance Headquarters Cayman Islands, and Binance US to clarify the same. Investment frauds in Pakistan were perpetrated by asking users to register with Binance and to transfer funds to third-party wallets, under the pretense of unrealistic returns. According to the FIA Notice:

These schemes are beneficial to old clients, but they can be detrimental to new clients. They eventually disappear once the clients have built a substantial capital base of billions of rupees.

The Pakistani agency identified 11 mobile apps that were fraudulent and stopped functioning after stealing user funds. FIA identified the following apps: MCX; HFC, HTFOX. FXCOPY. OKIMINI.

The fraudsters directed users to sign up for Binance to transfer funds. They also added victims to a Telegram group to provide “expert betting signals” and each application had around 5,000 customers. This notice was also added:

“At least 26 suspect Blockchain wallet addresses (Binance address) were identified, where fraudulent amounts may have been transferred. Binance Holdings Limited has been notified to provide details about these wallet addresses and to block their debit.

Binance was also asked for information, including official supporting documents as well as the integration mechanism of APIs used by fraudsters to connect to Binance’s services. The notice warns that the FIA has proactively barred bank accounts linked to suspicious apps.

“In the event of non-compliance with these terms, FIA Cyber Crime will justify recommending financial sanctions on Binance through State Bank of Pakistan.”

Cointelegraph has yet to hear back from Binance.

Related: Head of local association claims that Pakistanis hold $20 billion in crypto assets

The president of the Federation of Pakistan Chambers of Commerce and Industry, Nasir Hayat Majoon, revealed in December 2021 that the combined crypto assets of Pakistani citizens was $20 billion.

Cointelegraph reported that the FPCCI president has confirmed the figures based on research papers released by the chamber. The 2021 Chainalysis Global Crypto Adoption Index placed Pakistan third in terms of its index score, behind India and Vietnam.

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