Bengaluru Man Loses Rs 91 Lakh in Stock Market Fraud; Zerodha CEO Nithin Kamath Shares Safety Tips

Bengaluru: A 39-year-old software engineer, Ranjan (name changed), lost nearly Rs 91 lakh in a sophisticated stock market scam involving fake trading apps and promises of massive returns. The incident highlights the growing menace of financial frauds, as noted by Zerodha CEO Nithin Kamath, who shared preventive tips and expressed concerns about scammers leveraging artificial intelligence.

How the Scam Unfolded

The ordeal began when Ranjan (Name Changed) received a WhatsApp message offering stock market training and asking him to vote for fraudsters in a so-called "Global AI Smart Trading Competition." He was added to a Telegram group where a person named Chandra Takal, claiming to be a trading expert, provided guidance on trading strategies and directed him to download two apps.

One app displayed investment and profit details, while the other, named Dwaai, facilitated transactions. Initially, Ranjan was lured with small profits of 5-10% on his trades. Convinced by the returns, he invested progressively larger amounts and even participated in IPOs under the Qualified Institutional Buyers (QIB) category, with promises of at least 50% profit on listing day.

When Ranjan's investment reached ₹28 lakh, he was persuaded to borrow funds through a fraudulent banking app. His total investments eventually reached ₹91 lakh. The scammers then blocked his access to the app, claiming he needed to repay a ₹63 lakh loan before selling his "IPO stocks."

Despite paying the demanded amount, further withdrawal attempts were blocked under the pretext of foreign transaction fees and Securities and Exchange Commission (SEC) regulations. Realizing he had been defrauded, Ranjan approached the police.

Kamath’s Warnings and Tips

Highlighting the rise of financial scams, Zerodha CEO Nithin Kamath stated, "The trend of these frauds is increasing. The past 9 months alone have had scams worth ₹11,000 crores! I dread to think what it will be like once the fraudsters use AI. 😔"

Kamath advised users to safeguard their digital presence, suggesting, "Change the settings on your WhatsApp and Telegram so strangers can't add you to groups. Here's screenshots of the settings screen that show how to do it."

Scammers’ Modus Operandi

Scammers often lure victims by mimicking legitimate platforms. “You are asked to install fake trading apps that look exactly like those of major brokers. On the first couple of trades, you will make money. This is designed to convince you that you can make a lot of money,” Kamath explained.

Legal Action Initiated

The East CEN Crime Police have registered a case under the Information Technology Act and Bharatiya Nyaya Sanhita (BNS) Section 318 (cheating). Investigations are underway to trace the fraudsters and recover the lost funds.

This case underscores the importance of verifying the authenticity of trading platforms and exercising caution in digital interactions to avoid falling victim to similar scams.