An alleged ₹500 crore (approx. $772 million) cash-for-clicks ponzi scam in India is complete with Bollywood celebrities endorsements and payouts in Bitcoin.
According to local reports, the Central Bureau of Investigation (CBI) – India’s primary law enforcement and intelligence agency – has begun an investigation into an alleged ponzi scheme that promised money for clicking on online advertisements.
For context, the case is centered around a new private startup called Webwork Trade Links, that launched in September last year, with the paid-up (cash for stock) capital of a relatively measly ₹1 lakh, about $1,500. Four months later, the company’s revenue had grown to ₹260 crores, nearly $400 million, entirely from investors’ money.
‘Growth Strategy’
The money came in after the founders of Webwork launched Addsbook.com in October. Investors were promised rich rewards for clicking on advertisements posted on the website. According to one report, over 400,000 investors had signed up in four months.
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The company’s marketing campaign for luring investors went mainstream when Bollywood actors Shah Rukh Khan and Nawazuddin Siddiqui endorsed Addsbook, with televised advertisments. Shah Rukh Khan, in particular, is commonly seen as Bollywood’s biggest star and figures among top 10 highest-paid actors in the world.
More pointedly, the founders of the website had collected ₹500 crore, nearly $775 million, from 200,000 ‘investors’ over the same period. The accused founders reportedly purchased luxury automobiles, an Audi and a Mercedes Benz, for ₹2 crores, about $310,000.
Cash to Bitcoin
Unsurprisingly, the cash stream raised red flags, enough for banks to block bulk payments from the company to investors in late December. Webwork’s founders switched gears and began asking investors to accept payments through bitcoin.
According to the Times of India, the company bought bitcoin worth ₹13 crores, approx. $2 million, for payments to those who saw their returns cut off.
An official complaint filed by one investor alleges that he paid out ₹1.72 lakhs, about $2,600, with the promise of returns for clicks on advertisements for a year. According to a news report, the complaint added “people have invested heavily as they were influenced by both celebrities” who have been named in the complaint.
Meanwhile, a directive from a state high court has now seen the CBI take over the case which sees the two founders of Webwork in violation of the Information Technology Act.