In Bits and Coins

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The cryptocurrencies are not the legal tender in India but various companies are making big monies in Kashmir, reports Saima Bhat

Within a week after Arun Jaitley, the Finance Minister, on January 2, 2018, clarified that bitcoin is not a legal tender in India and his government was waiting for a report of experts on crypto-currencies before taking any decision, two colleagues Priya Ranjan and Syed Gulfam, both residents of Bihar, under the company name JIAO Digital started working in Kashmir. They were successful in motivating more than a thousand people from different professions to invest in the company by offering huge returns.

What is Cryptocurrency

A cryptocurrency (cryptocurrency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.

In 2009, some Satoshi Nakamoto, whose real identity is still unknown, thought out of the box by inventing a currency in which third-party mediation was eliminated. This new currency is known as Bitcoin.

Bitcoin, open source information suggests, is a digital currency with no central authority at all. It’s a peer-to-peer (P2P) electronic cash system which is aptly called the ‘Internet of Money’. Crypto-currency is absolutely hassle-free and circumvents the middle-men and their fees as well, which translates into saving time and money. It was the first decentralized cryptocurrency. Since then, numerous other cryptocurrencies were created. These are frequently called altcoins, Ethereum, ripple, etc. Bitcoin and its derivatives use decentralized control as opposed to centralized electronic money or central banking systems. The decentralized control is related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger.

The said company is offering various packages ranging from the US $ 100 to 15000 to its customers to invest with the profit margin ranging from 0.5 percent to 1.5 percent on daily basis in ascending order of package opted by the customer. Further, more earnings (ranging from 8 to 12 percent) are assured to the client if he motivates others to join the investment chain.

Although all the transactions are recorded in the distributed ledger the names are always concealed. It’s just the wallet number which is on the public ledger. The fact that deals can’t be traced back to the individuals, it has given some sort of security net even to the criminals who buy or sell drugs or other illegal services online.

The Kashmir Experience

The JIAO Digital initially started operating from a local hotel in Dalgate area, where they stayed for more than a month starting from January 06 to mid-February. “They started with workshops where people were made to understand how the trading works. Every day they used to receive an average 20 people and for that time period, they were charged with the food bills worth Rs 60, 000. The people were from across Kashmir, both rural and urban,” said a source outside the hotel. He also added Priya and Gulfam used to stay in the hotel alternately.

The phone number of one of the partners lead to Muzaffar Ahmad Zargar, a resident of Karan Nagar, who said he is a retired government official and is using the Priya Ranjan’s registered number. He said in order to increase his wealth he invested Rs 1.5 lakh. “When I started investing there were huge returns but now the returns have come down as the market is not good. I now earn just $ 100 to $ 200 dollars a day.”

But Zargar, the owner of a playschool, Little Champs School in Hyderpora, is said to be an agent of the said company. He along with Mushtaq Ahmad Dandroo, a resident of Gooripora Rawalpora had earlier worked with another company, namely Trade in BTC, which was also dealing in cryptocurrency. “The duo has reportedly duped many people, worth crores of rupees by making them invest in cryptocurrency through said the company,” Informed sources said.

Zargar says there was not a good response for cryptocurrency in Kashmir. “Only 10 to 12 people came for workshops so both the guests left early,” he said. “I called them a number of times for the returns but they asked me to wait as the international market was going down. They had plans for giving land as security for bigger investments.”

Various investigations by the state police found that this company is nowhere registered in India, and they are not providing any type of documental support (receipt) to the investors except an internet ID, through which investors are able to follow their investment and profits on daily basis.  It is further learnt that as of now there is no cash payment gateway operating in India, through which cryptocurrencies can be liquidated. However, many online stores accept cryptocurrencies as a mode of payment for the purchase.

The particular company has tied up with some Kashmir based builders and real estate dealers to lure Kashmiri people. The company asks the investors to invest in real estate owned by such real estate owners, which is further invested in the company. In return, the client gets land registered in his name along with an ID for trading in cryptocurrencies and thus becomes beneficiary of eventual profits.

The investment with the said company is unilateral one: if an investor wants to dispose of his earnings (in the form of cryptocurrency), the company does not buyback. They have to get other people who will purchase their shares.

The local bank does not deal with cryptocurrency as they term it as illegal. “There is no investment through J&K Bank or any other banks operating in Jammu and Kashmir but the trading done through private companies cannot be ruled out,” said a banker.

Unconfirmed reports also suggest that few other companies are also operating in Kashmir for the same purpose and almost with the same model of business. Frauds on their part cannot be ruled out, people aware of the happenings said. Top Indian banks, including State Bank of India, Axis Bank, ICICI Bank, HDFC Bank and Yes Bank, have suspended some accounts of major Bitcoin exchanges in India on suspicion of dubious transactions of top ten such cryptocurrency exchanges or platforms such as Zebpay, Unocoin, CoinSecure, BtcxIndia, among others.

Fearing police monitoring, both Priya Ranjan and Syed Gulfam started changing their locations in Kashmir.  Initially, in Dalgate they then shifted to one of the leading hotels on Maulana Azad Road but the hotel staff refused to provide any information as they claimed the duo had checked out from the hotel just a few days back. “We will be coming back by the end of this month,” said Priya Ranjan from his Delhi registered number. But the sources informed they were still in Kashmir and operating their business.

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