“I have invested Rs 4 lakh and will be getting an assured monthly income of Rs 90,000 now. I have already received it for the first month,” said Mohd Shahbaz, who has been assured a guaranteed fixed income by an agent who is marketing a crypto token, B-Love, among people in Delhi. Like Shahbaz, a large number of people have put their hard-earned money in such unknown or little-known crypto tokens expecting guaranteed monthly returns.
As digitalisation has increased at a fast pace, apart from traditional bogus investment schemes like chit funds, one more instrument has now been added — crypto. While there are various crypto tokens in the market, News18.com has come across B-Love, which is creating a network in neighbourhoods like a pyramid scheme or multi-level marketing.
The B-Love token, according to the company’s website https://blovenetwork.online/, is a cryptocurrency token by B-Love Network, which was founded by Dubai-based Pakistani crypto trader Omer Khan. Through its Twitter handle, the company keeps posting updates regarding the token. “Get 300 active referrals in 30 days. Win a free trip to Thailand,” reads a tweet by BFIC BLove Network regarding its tokens.
News18.com tried to contact BFIC BLove Network through its Twitter handle but the company did not respond. This article will be updated whenever a reply is received.
The B-Love token was floated by the company after its earlier version, BFIC, was rendered inactive due to “payment issues faced by investors”, according to a person who had invested in it.
Its Android app was launched just around four months ago, and it has so far registered more than 5 million downloads on the Google Play Store. The company’s domain ‘Blovenetwork.online’ was also registered around the same time. Its Apple app was launched on May 3.
“The users are spread across various cities in India,” said a person, who attends local meetings related to the token.
Though the company claims it will list the token on over 50 exchanges in the future, B-Love is so far not listed on any major exchange, including CoinDCX, Zebpay, WazirX, or Binance. It is just listed on the little-known xchangeon.io. This exchange, as observed by News18.com, is currently not adequately working and has key features disabled.
B-Love token: How is it gaining users so fast?
As the token is not listed on any major exchange, it is resorting to the direct selling method to circulate its crypto. Those who are invested in the token need to find buyers by bringing new people on board.
According to a crypto expert, who did not wish to be named, “As this particular token is not listed on any major exchange, prices of such tokens are also manipulative.”
A token user, on the condition of anonymity, said, “If you sell B-Love token through an exchange, you have to pay 30 per cent tax (TDS) on profits. But, if you do it without exchange or in cash, there is no need to pay TDS. Most people do it in cash.”
Said an independent tax practitioner, “Such practice is tax evasion. According to the income tax rules, a 30 per cent TDS is levied on any gains on virtual digital assets, including cryptocurrencies, without any offset.”
He also said one cannot assure a guaranteed return on any investment scheme as per Indian laws.
Crypto market: Are pyramid schemes or direct selling allowed?
Mehak Khanna, partner at law firm Khaitan & Khaitan, said, “If the concerned app or the entity dealing with crypto does not sell identifiable goods or services through its direct sellers to the customers and operates a scheme where one makes quick and easy money by enrolling more and more subscribers, then it may be considered to be a pyramid or money circulation scheme. Though direct selling business is legitimised in India and regulated through inter-alia the Consumer Protection (Direct Selling) Rules, 2021, money circulation schemes and pyramid schemes are not.”
Khanna also said a pyramid or a money circulation scheme usually involves enrolling or recruiting maximum participants and masking the subscription or transfer of money with a (supposedly) legitimate-looking investment business to derive illegitimate benefits. “In such a scenario, the government can initiate investigation and action against such set-ups under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.”
Recently, the government through its notification dated March 7, 2023, brought digital and virtual currencies under the purview of the Prevention of Money Laundering Act, 2002.
“The entity and persons dealing with crypto thus need to be cognisant of the repercussions under the Prevention of Money Laundering Act, 2002, as well. And, the onus may also come on the person who may have unknowingly participated in the crypto market (which could be through entrusting it to a friend or fund manager, etc), and hence one needs to be cautious of the implications of such apps,” Khanna added.
Read all the Latest Business News, Tax News and Stock Market Updates here
