Cryptocurrency is becoming more popular in India. Many people are investing in Bitcoin, Ethereum, and other digital coins. But along with this growth, there are also rising cases of crypto scams. From fake investment schemes to influencers selling “get-rich-quick” courses, scammers are finding new ways to cheat people.
What Is a Crypto Scam?
A crypto scam is when someone tricks you using cryptocurrencies. They may promise high returns or sell fake coins. Many scams happen through social media, fake websites, or WhatsApp groups.
Common Types of Crypto Scams:
- Ponzi Schemes
- Promise daily or weekly returns (like 10% a day)
- Early investors are paid using new investors’ money
- Eventually, the scheme collapses when new money stops coming
- Pump-and-Dump
- Scammers buy a cheap coin
- They promote it heavily and make it look valuable
- When the price rises, they sell, and new investors lose money
- Fake Influencers and Courses
- People on Instagram or YouTube show luxury lifestyles
- They sell costly courses that offer no real value
- Use fake screenshots and testimonials to look genuine
- Phishing & Fake Exchanges
- Fake websites or links that look like real exchanges
- Ask for login details or private wallet keys
- Once you enter, your crypto is stolen
Is Crypto Trading Legal in India?
Yes, crypto trading is legal in India, but it is not considered legal tender. This means you can trade crypto, but you can’t use it like regular money to pay for things.
Important Points:
- 30% tax on profits from crypto
- 1% TDS on every transaction
- KYC (Know Your Customer) and AML (Anti-Money Laundering) are required
- Supreme Court of India allowed crypto trading again in 2020 after RBI’s ban was lifted
Which Laws Apply to Crypto Scams?
Here are the key laws that can be used against scammers:
Bharatiya Nyaya Sanhita (BNS)
- Section 318(4) – Cheating by Dishonest Means
- If someone tricks you to give them your crypto, they can be jailed or fined.
- Section 228 – Fabricating False Evidence
- If they create fake proofs like screenshots or testimonials to scam you.
- Section 238 – Hiding or Destroying Evidence
- If they delete messages, websites, or wallet data to hide the scam.
- Criminal Breach of Trust
- If someone you trusted with your crypto misuses or steals it.
Information Technology (IT) Act
- Section 66D – Impersonation Using Electronics
- If someone pretends to be an expert or influencer online to cheat you.
- Section 67A – Cyber Terror
- Applies to activities that cause fear or mass harm using tech.
- Hacking/Data Theft
- Covers access to your crypto wallet or exchange account illegally.
Consumer Protection Act
If you are sold fake services (like courses or signals), you can complain under this act.
- Misleading advertisements
- Unfair trade practices
- Losses due to poor services
Real-Life Example: Bitconnect Scam
In 2017, Bitconnect promised high crypto returns daily. It was a Ponzi scheme. Thousands of people lost money. The promoters used fake endorsements and flashy websites. When the scheme collapsed, it exposed how dangerous unregulated crypto investing can be.
How to Identify a Crypto Scam
- Too-Good-To-Be-True Returns
- “Guaranteed 5% daily income” is always fake
- No Real Information About the Company
- Fake websites, no registered office, and no team details
- Pressure to Invest Quickly
- “Offer valid only for today!” is a red flag
- Fake Testimonials & Screenshots
- Easily edited to look real, but may be false
What You Can Do If You’re a Victim
- File a Police Complaint
- Go to your local police station or cybercrime portal
- Contact Cyber Crime Cell
- Visit https://cybercrime.gov.in
- File a Consumer Court Complaint
- If you paid for fake services or courses
- Preserve All Proof
- Save messages, receipts, screenshots, emails
Possible Punishments for Scammers
| Law | Offense | Punishment |
| BNS 318(4) | Cheating | Up to 7 years jail + fine |
| BNS 228 | Fake evidence | Jail + fine |
| IT Act 66D | Online impersonation | 3 years jail + ₹1 lakh fine |
| IT Act (general) | Hacking or fraud | Up to 3-10 years |
| Consumer Court | Misleading ads | Refund + compensation |
Tips to Stay Safe in Crypto
- Use trusted exchanges with KYC policies
- Don’t share private keys or OTPs
- Avoid unknown Telegram/WhatsApp groups
- Use 2-factor authentication
- Check if the person is registered or regulated
Crypto scams are real and growing. But knowing your legal rights and acting quickly can save you from losses. India has clear laws under BNS, the IT Act, and Consumer Protection to deal with such frauds. Always verify before investing, and don’t fall for hype or luxury lifestyle traps.
If you’re a victim, don’t hesitate to take legal action and file a complaint. Protect your money, and help stop the scammers.
Advocate Siby Varghese
Cybercrime lawyer & Crypto lawyer
Co- Founder of Shield Law Firm
Co- Founder of Vakeel at home app (app for advocates)
If you are a victim of crypto frauds Contact adv. Siby Varghese at 8884999803 (http://www.sibyvarghese.com/)
