A Trap is laid for Gullible Bitcoin Investors

Just lat week, RBI declared:

 it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.

Most media men interpreted this as a clear indication that no Bank or NBFC or Commodity traders also registered for Foreign Exchange trading, could have any business related to Bitcoins. The earlier action of the ED sending out notices to lakhs of Bitcoin investors who had traded in any of the Indian exchanges to disclose the source of their acquisition and also the details of tax payments on the Bitcoin transactions had also indicated that Bitcoin investors will face both action from RBI and ED if they continue to indulge in Bitcoin.

It is obvious that most Bitcoin investments were made out of black money and hence the investors were trying to hide themselves. The Exchanges are taking steps to move out to other countries such as Singapore and handle the business emanating from India. The Bitcoin holders who have remained underground so far are trying to find exchanges outside India to either sell their bitcoin holdings and quit their positions or continue to invest.

However, any movement of INR to Bitcoins and conversion of Bitcoins to undeclared Foreign Exchange accounts could be violation of FEMA and land the investors in bigger trouble than just surrendering their holdings to the Indian Government and pay whatever tax they need to pay and enjoy what is left. Since however the prices have tumbled from around USD 19000 per bitcoin to less than USD 7000, not much of profit or capital may be left for many of these Bitcoin investors who continued to ignore our suggestions to stay away.

When the situation therefore indicates that no sane investor would like to invest in Bitcoins in India now, it is  surprising that a company called “Synup” which declares itself as a Newyork and Bangalore based startup with operations in US and Canada and founded by a serial entrepreneur, Ashwin Ramesh has issued a Press Release today a launch of a new website coinfriendly.io with  10717 bitcoin accepting businesses listed on its platform. The objective of the website is clearly stted as to allow biticon users across the globe to identify these stores and services in 20 countries and becoming the largest repository of local businesses.

Ofcourse, at present there are no India based  businesses listed on the platform and hence this will project itself more like a directory of Bitcoin companies across the globe excluding India.

If there is no target audience in India to use the platform, it appears strange that the Company should send out the press release to Bangalore based publications.

We have to wait for tomorrow to see which publications carry the press release and what they write. However we can expect at least some of the publications carry the press release even if in the inside pages, without their own comments. Like a typical phishing campaign, message will reach out to Bitcoin sensitive audiences.

The obvious inference is that the publicity is meant to inform the Bitcoin investors that even if India based Bitcoin exchanges shut down their operations, there could be many options in other countries to park their black money. It should also be possible to launder the Bitcoin holdings through many of the businesses listed in the platform to buy goods or simply trade it for foreign exchange.

Gullible investors may therefore fall into the trap for using the services of any of the listed service providers to use their Bitcoins or buy fresh bitcoins if available through any exchanges.

Investors in India are hereby cautioned that any dealings with the entities listed in this website will be in the radar of the ED as people dealing with these entities will clearly be those who will be using black money holdings in the form of Bitcoins.

Such customers may therefore quietly start getting notices as to explain the source of their bitcoins used and whether they have more bitcoins in stock.

If ED has not yet started this activity, they better do it immediately.

In the meantime, Police in Bangalore should also keep a watch on this Company’s activities and whether it will promote Bitcoin indirectly in India.



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About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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