Pakistan Authorities to Investigate Crypto Exchange Binance in Suspected $100 Million Scam: Reports

Pakistan will be investigating the complaints of Binance users who have alleged that they were made to transfer funds into third-party wallets.

By Radhika Parashar | Updated: 11 January 2022 19:05 IST

Pakistan Authorities to Investigate Crypto Exchange Binance in Suspected $100 Million Scam: Reports

Photo Credit: Reuters

Binance was launched in China in 2017 but later moved its headquarter to Cayman Islands

Highlights

Binance Pakistan has addressed case on Twitter
Users accused Binance for misguiding them
Funds up to $100 million (roughly Rs. 739 crore) at stake

The federal investigation agency (FIA) of Pakistan has sent an official notice to crypto exchange Binance that is being named in a major scam. The FIA will be investigating the complaints of Binance users who have alleged that the crypto exchange made them transfer funds into unfamiliar third-party wallets. The scam is estimated to have costed people a collective total of around $100 million (roughly Rs. 739 crore). A notice has also been sent to Binance headquarters located in the British oversees territory of Cayman Islands for answers.

In Pakistan, the notice has been addressed to Hamza Khan, the general manager and growth analyst of the Binance unit there. The investigative authorities have asked Khan to explain the company's association to “fraudulent online investment mobile applications", a report by Pakistan's Dawn News reported.

In initial probe, Pakistani authorities managed to identify around eleven fraud apps that were collecting the users' funds unlawfully. The names of these apps are random abbreviations that may or may not mean something. Some of these apps are HFC, MCX, HTFOX, BB001, and AVG86C among others.

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Later, the fraudsters also lured investors to join Telegram channels offering them “expert betting signals”. Each of these malicious Telegram channels were hosting up to 5,000 people each, reports added.

Images of FIA's notice to Binance have been circulating on Twitter.

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 crypto exchange has promised complete cooperation with the authorities into this case.

In a statement, FIA cybercrime wing Additional Director Imran Riaz has confirmed to the media that Binance got in touch with them assuring cooperation, a report by The News said.

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Binance Pakistan has also posted a message promising cooperation on Twitter while saying that will not be commenting on the matter.

We do not comment on specific matters with regulatory and law enforcement authorities. However, as a matter of policy, our general approach is to cooperate with investigations wherever possible. Specifically, Binance tries to work closely with the law enforcement and regulatory
— Binance Pakistan :flag-pk: (@BinancePk) January 7, 2022

Binance launched in 2017 with its head office in China. Later, when China began tightening thr noose around crypto activities, the company moved its headquarter to Cayman Island.

It, however, is not the only crypto exchange to be facing legal action in Asia presently.

An array of crypto exchanges have recently found themselves in the middle of trouble in India as well.

Earlier this month, India launched an investigation into a number of crypto exchanges, including CoinSwitch Kuber, CoinDCX, WazirX, and Unocoin for allegedly evading taxes.

Scammers have been getting active in the crypto sector, several reports and rising number of cases have shown.

In December 2021, a report by research firm Chainalysis revealed that scams mooched off over $7.7 billion (roughly Rs. 58,697 crore) from crypto investors last year.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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Further reading: Binance, Crypto Exchange, Cryptocurrency, Scam

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More