Recently, an important financial scandal involving the Hibox application has emerged, with over 30,000 investors reportedly losing around Rs 1,000 crore. Promoted by various social media influencers, the app promised high returns on investments, leading many to trust it blindly. The Intelligence Fusion and Strategic Operations (IFSO) unit of the Delhi Police is currently investigating the case, focusing on the role of digital payment platforms like PhonePe and Easebuzz.
About the Modus Operandi
The Hibox scam employed a classic Ponzi scheme structure. Victims were enticed to invest money with the lure of guaranteed daily returns ranging from 1% to 5%. Initially, early investors were paid returns, which created an illusion of legitimacy and attracted more victims. However, once the influx of new investments dwindled, the operators ceased payments and vanished.
Role of Influencers
The involvement of popular social media influencers and YouTubers was decisive in the scam’s success. Their endorsements provided a veneer of credibility, leading many to overlook the inherent risks. Notable figures, including Saurav Joshi and Abhishek Malhan, were among those who promoted the app, which has raised questions about influencer accountability in financial promotions.
Initial Complaints and Investigation
The investigation began when the IFSO unit received multiple complaints from individuals who had invested in the app. The first complaints were registered on August 16, leading to the filing of an FIR on August 20. Subsequent inquiries revealed a pattern of similar complaints across various districts in Delhi, indicating a widespread fraudulent operation.
Financial Transactions and Arrests
Investigators traced the financial transactions back to payment gateways like Easebuzz and PhonePe. A detailed analysis uncovered four bank accounts linked to the scam, which had siphoned off a total of Rs 18 crore. J Sivaram, identified as a key figure in the operation, was arrested, and the investigation continues to scrutinise the roles of the implicated payment platforms.
Current Status of the Investigation
As of now, a look-out circular has been issued against the directors of Hibox, who are believed to be outside India. The involvement of employees from Easebuzz and PhonePe is under investigation, as authorities explore whether these platforms had any complicity in the fraud. Influencers who promoted the app have been summoned for questioning, denoting the broader implications for social media marketing in financial contexts.
Questions for UPSC:
- Discuss the implications of influencer marketing in financial scams, using the Hibox application case as an example.
- Examine the role of digital payment platforms in facilitating financial frauds.
- What measures can be implemented to protect investors from Ponzi schemes?
- Analyse the responsibilities of social media influencers in promoting financial products.
- Evaluate the effectiveness of current regulations in curbing online financial frauds in India.
