The Pakistani Federal Investigation Agency (FIA) is investigating possible links between Binance and a multi-million dollar crypto scam in the region.
The FIA's cybercrime division has asked regional manager Hamza Khan to clarify its position on the company's ties to deceitful mobile apps for online investment. Relevant inquiries were also sent to the headquarters of the exchange in the Cayman Islands and Binance US.
According to the agency, the investment fraud was carried out in the form of a Ponzi scheme, when users were pledged high returns for attracting new customers.
Investors were asked to register on Binance and then transfer funds to a third-party wallet for profit. After raising enough capital, the organizers disappeared with user funds.
“These schemes benefit old clients at the expense of new ones. Ultimately, they disappear with a substantial capital base worth billions of rupees,” the FIA explained.
On average, the number of users each was about 5,000, although HFC had 30,000 customers.
“The declared range of investments per person was from $ 100 to $ 80,000 - an average of $ 2,000. Thus, the estimate of the damage from the scam has reached almost $ 100 million,” the publication quotes the FIA statement.
Law enforcement officers have identified "at least 26 suspicious wallets" on Binance, where the stolen funds could have been transferred. The authorities required the exchange to provide details and freeze the accounts. The FIA also wants to find out the mechanism for integrating Binance API fraudulent applications to provide services.
The department said it was counting on the "liberal and quick approach" of the exchange in assisting the investigation. Otherwise, the FIA recommends Pakistan's central bank to fine Binance.