A suspected cryptocurrency Ponzi scam has come to light in Tamil Nadu’s Madurai and Dindigul districts, triggering protests by hundreds of small investors. Daily-wage workers, homemakers and auto-rickshaw drivers were among those who took to the streets on Friday, demanding the return of their money. The situation turned tense in Kasampatti village in Dindigul, where angry investors allegedly vandalised the houses of agents and intermediaries. Madurai district cyber crime police have registered a case and arrested 12 people in connection with the alleged fraud.
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Police said they have received more than 500 complaints so far and suspect that thousands of investors may have been affected. The total amount allegedly lost is believed to run into crores of rupees. Investigators are now working to trace the money collected from investors and identify the wider network involved in the alleged fraud.
Ranjith, a resident of Melur, has been identified as the alleged mastermind. Police said he allegedly presented himself as a US returnee and claimed to have experience in overseas investments. He also allegedly claimed to have contacts in the United States. Investigators suspect that these claims were used to convince people to invest in cryptocurrency schemes promising high returns.
According to police, the alleged operation was conducted through links and an app. Agents reportedly sent individual links or APK files to investors. When the links were opened, investors could see account details specific to them, including balances and alleged earnings displayed in US dollars. Some investors reportedly said they had continued receiving such links until recently.
Investors were allegedly asked to pay ₹50,000 under the ‘FQL Scheme’ and around ₹1 lakh under the ‘VG Scheme’. The money was reportedly handed over in cash to agents instead of being deposited through the app or links. After receiving the payment, the agents allegedly credited the investors’ accounts with dollar-denominated balances visible through the digital interface. This reportedly created the impression that the money had been invested in a genuine digital investment platform.
Investors were then given three online tasks to complete through the links. They were allegedly promised additional dollars as commissions for completing the tasks. During the initial phase, investors seeking to withdraw money were reportedly paid in cash by agents. After a withdrawal, the corresponding amount would be deducted from the balance displayed on the app.
Investigators suspect that these initial payments helped build confidence in the scheme. Investors were allegedly told that the system operated on a ‘copy-trading’ model and that their investment would double after a specified period. Those who invested repeatedly or increased their investments were allegedly promised ‘Level-Two Investor’ status, along with higher interest and larger returns.
Level-Two Investors were reportedly given additional online tasks and allegedly offered rewards such as motorcycles and gold jewellery for bringing more people into the scheme. According to investors, some participants initially received commissions and returns, which helped establish credibility and encouraged others to join. The scheme subsequently spread through word of mouth.
Police said the alleged network had been operating for at least two years and later expanded from Madurai to neighbouring Dindigul. After information about the alleged fraud spread on social media, a large group of investors gathered outside the homes of agents in Kasampatti. The houses of agents identified as Ramesh and Vijay were allegedly vandalised. When police attempted to take Ramesh for questioning, protesters allegedly threw stones and footwear at the police vehicle.
The situation was later brought under control after senior police officials held discussions with affected investors and assured them of appropriate action. Among those arrested are A Kallannai, P Kallanai, K Pushpam, A Panchu, R Anandhi and A Rajalakshmi, along with other accused persons.
Renowned cyber crime expert and former IPS officer Prof. Triveni Singh said such investment frauds often rely on building trust through small initial payouts or apparent returns before persuading victims to invest larger amounts. He said the promise of unusually high returns and incentives for bringing in new investors are common warning signs of Ponzi-style schemes. Investors should independently verify the legitimacy of an investment platform, its registration details and claims of guaranteed or unusually high returns before committing money.
Police are now examining the alleged network’s bank accounts, cash transactions, the role of individual agents and the total amount collected from investors. Investigators are also trying to determine how the dollar balances displayed on the app were generated and how the alleged scheme was structured to make investors believe they were receiving genuine investment returns.
