Cyber frauds are using cryptocurrency to mislead probes, say Noida police


For investigators at the cyber cell of Gautam Budh Nagar police, a new challenge has ended up becoming a roadblock in several cases of cyber fraud — cryptocurrency.

In the words of Reeta Yadav, in-charge of Cyber Crime police station in Sector 36, cryptocurrency has left investigators scratching their heads as cyber fraud cases have become almost impossible to solve.

“Cyber frauds have become technologically more advanced and have started using cryptocurrency for online transactions. It makes them almost untraceable for investigators. There are at least 18 such pending cases since 2022 at our police station and investigations have reached a dead-end due to the use of cryptocurrency,” said Yadav.

In 2021, there were only seven such cases where cryptocurrency was being used by cyber frauds and in 2020, no such case came to light, data from the Cyber Crime police station showed.

“There are two ways in which cryptocurrency is being used by fraudsters. One is to hide their own identity, while making monetary transactions online. Another is to dupe people in the name of investing in cryptocurrency. Lately, people have been reading about cryptocurrency but do not exactly know what it is. Fraudsters take advantage of this and commit fraud on the pretext of cryptocurrency,” said the officer.

Reflecting on a recent case, Yadav explained how cryptocurrency platforms help the cyber frauds. “A Sector 52 resident registered a complaint last month, alleging that he was duped of 1.84 crore by cyber frauds in the name of online trading. This is a common modus operandi being used by cyber criminals these days. Here, they target a victim and lure them to download a mobile application and invest money in the name of online trading. The user of the mobile application can see the total invested amount reflecting on the app. This number will keep increasing and the victim thinks that his investment is increasing but it is all fake. Initially, the frauds will double the invested money and return it to the investor in small amounts, which will lure the victim to invest more. Once they keep investing, the cyber frauds will then disconnect all contacts and go untraceable,” Yadav said.

The Cyber Crime police station only registers cyber fraud cases of over 5 lakh, while other cases are registered at local police stations of the district.

Elaborating further, Yadav said that earlier, investigators were able to reach the cyber frauds via the bank accounts where the fraudulently extracted money from the victims was being transferred. “However, in 2022, cyber frauds started using cryptocurrency as a safe wall between investigators and themselves to protect from being traced”, she said.

Yadav added, “In this particular case, the money was being transferred in a bank account registered in the name of a deceased person. From here, the money was transferred to a cryptocurrency account. Using a platform called ‘Binance’, the cyber frauds are able to convert the money into cryptocurrency. Now, through cryptocurrency, this money is then withdrawn from various other bank accounts. However, using a software called ‘Cloudflare’, the cyber frauds are able to hide the original internet protocol (IP) address of the cryptocurrency platform where the money is being transferred. Instead, it shows a wrong IP address to investigators which may show some foreign location and misleading the investigators,” said Yadav.

Yadav added that lack of any government regulations on use of cryptocurrency in India makes it difficult for investigators to reach cyber frauds. “Now, if we want the software ‘Cloudflare’ to help us in investigation by sharing us details of the user who is using it to hide his IP address, we will have to an international process and loop the Interpol in the investigation, which requires permission from central investigation agencies of our country,” she said.

Investigators further say that even if they get hold of the mastermind of a cyber fraud gang through manual policing, it becomes extremely difficult to prove them guilty in court because of the use of cryptocurrency involved.

“Since the fraud has changed the IP address, we do not have any concrete proof to show in court that this person has been running the cyber fraud gang, even if we know it from other sources,” said another officer of the cyber cell, Noida zone.

According to Abhishek Verma, deputy commissioner of police (cyber cell), criminals have started using cryptocurrency for all kinds of online transactions, including those dealing with narcotics.

“Cyber fraud and narcotics trade is being used simultaneously by miscreants now and the use of cryptocurrency for online transactions has made it more difficult for investigators to trace the suspects. All sorts of NDPS (Narcotic Drugs and Psychotropic Substances) crimes are now using the dark web and making payments through cryptocurrency, investigations have shown,” DCP Verma said.

Meanwhile, cyber experts say that the cyber police need to increase their coordination with international agencies in order to crack cases involving cryptocurrency.

“If a person sitting in India is using an international software to commit cyber frauds, the local police should definitely go ahead and involve the international agencies whether it is the US or Switzerland in order to crack the case. The coordination with international agencies is pivotal for such cases. Moreover, cyber police need to catch up with the ever-advancing cyber frauds by upskilling themselves in matters of cyber investigations and keep themselves up to date with the latest technological advancements,” said Anuj Agarwal, chairman, Centre for Research on Cyber Crime and Cyber Law.


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