Binance nominates investigation team to liaise with FIA in crypto scam probe, says official

Published January 11, 2022
A look at the Binance website on a mobile phone. — Dawn.com
A look at the Binance website on a mobile phone. — Dawn.com

Cryptocurrency exchange Binance has assured the Federal Investigation Agency's (FIA) Cyber Crime Wing (Sindh) its "full support" in an investigation into a multi-million dollar scam, a senior official of the FIA claimed on Tuesday.

The FIA had last week issued a notice to an official from Binance to explain his position on the company's linkage to "fraudulent online investment mobile applications". The apps were identified as MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK and 91fp that were using Binance blockchain addresses for transactions.

In the latest update today, head of FIA Cybercrime Sindh Imran Riaz said a telephonic contact was established with the crypto exchange on Friday night followed by further correspondence via email the next day.

"Binance has nominated a two-member team to coordinate with FIA Cyber Crime. The investigators are associated with the US Department of Treasury with specialisation in cryptocurrency investigations," Riaz said in a tweet.

The FIA official appreciated the response from Binance and said he was looking forward to continued cooperation with the exchange in unearthing criminal activities based on cryptocurrency.

How it all unfolded?

The FIA had initiated probe into the mega financial scam after a number of people from all over the country contacted the agency on Dec 20 and said that at least 11 mobile apps had stopped working and had "defrauded" them of billions of rupees.

"The modus operandi of these applications was to ask people for registration at Binance Crypto Exchange (Binance Holdings Limited) [...] the next step was to transfer money from the Binance Wallet to the account of that particular application," the FIA had said in a press statement on Friday.

"At the same time, all the members of the group were added in groups on Telegram where so-called expert betting signals, on the rise and fall of Bitcoin, were given by the anonymous owner of the application and admins of the Telegram groups," it added.

These apps crashed once a considerable capital base was established, robbing people of millions of dollars through the "referral bonus process."

"At least 26 suspect blockchain wallet addresses (Binance wallet address) have been identified where fraudulent amount may have been transferred. A letter has been written to Binance Holdings Limited to give the details of these blockchain wallet accounts as well as to debit block them," the statement had said.

"The reported range of investment per person was from $100 to $80,000 with an estimated average of $2,000 per person thus making estimated scam stand at nearly $100m."

Subsequently, the FIA had issued an order of attendance to Hamza Khan, the general manager/growth analyst at Binance Pakistan, to explain his position on the company's linkage to the scam.

"In case of non-compliance, FIA Cyber Crime will be justified to recommend financial penalties on Binance through the State Bank of Pakistan," the FIA had warned.

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