The group is currently under investigation for allegedly operating a crypto Ponzi scheme. The Enforcement Directorate (ED) has accused the company’s promoters and stakeholders of engaging in illegal cryptocurrency trading activities on several exchanges and promoting their own cryptocurrency, HR Crypto Coin.
Investors were promised a 30% direct referral income to introduce new customers into the scheme. Since January, the ED has reportedly frozen ₹260 crore ($31.12 million), including ₹212 crore ($25.4 million), from 55 frozen bank accounts of the company and its owners.
The investigation also traced ₹15 crore ($1.8 million) in immovable properties linked to the promoters and other leaders, allegedly acquired from proceeds of crime. Prompted by multiple complaints by Kerala Police, ED raided the premises of HighRich Smartech Pvt.
Ltd., HighRich Online Shoppe Pvt. However, returns for existing investors are funded by new investor contributions rather than actual profits.
These schemes remain a serious menace to global financial markets and investors. Recent high-profile cases underscore the urgency of implementing robust regulatory measures to prevent and mitigate the impact of such fraudulent practices.
The company had loaned out $8 billion to clients and managed nearly $12 billion in assets. An internal memo characterized their business model as resembling a Ponzi scheme.
In another notable incident, FTX, the former second-largest cryptocurrency exchange in the world, filed for Chapter 11 bankruptcy in November 2022. It has recently called for stronger SEC supervision to safeguard investors and ensure financial stability.