India’s CBI Targets ₹1.86 Cr ‘Digital Arrest’ & ₹350 Cr Crypto Ponzi Schemes

India’s cybercrime problem has once again come under focus after the Central Bureau of Investigation (CBI) carried out coordinated searches across six states and arrested three accused in a Rs. 1.86 crore (~$204K) “Digital Arrest” fraud case. 

The action, taken on February 25, 2026, stems from the cheating of a senior citizen from Kerala’s Kottayam district.

According to the CBI, the victim was subjected to digital intimidation under what is commonly referred to as a “Digital Arrest” scam, where fear and impersonation are used to extract money. Money was extracted under pressure and later routed through mule bank accounts and cryptocurrency-linked channels. 

What initially appeared to be a single-instance fraud soon expanded into a wider probe after financial trail analysis pointed to an organized, multi-state network.

Six-state searches linked to crypto fund movement

Based on digital forensic inputs, the CBI launched synchronized search and arrest operations in Goa, Bengaluru in Karnataka, Palakkad in Kerala, Nagpur in Maharashtra, Hyderabad in Telangana, and Delhi. 

The searches zeroed in on two key links in the cyber-fraud chain: operators running mule bank accounts and people arranging SIM cards using fake or misused KYC documents.

During the raids, teams recovered digital devices, debit cards, bank records, SIM cards, and other material linked to the fraud. Officials said the seized items are now being examined to trace money movement and identify others involved in the network.

Three arrests reveal distinct roles

Three people were arrested as part of the operation, with investigators saying each handled a separate function within the fraud setup.

A mule account operator was picked up from a hotel in Goa. He is suspected of controlling several bank accounts used to receive money taken from victims and of helping move the funds through cryptocurrency. Multiple digital devices containing incriminating information were seized from him.

In Nagpur, a shell company operator was arrested for allegedly running mule accounts through a shell firm. Investigators recovered a large number of debit cards and digital devices from premises linked to him, pointing to organized and repeated misuse rather than a one-off offence.

The third arrest took place in Bengaluru, where a SIM card fraud facilitator was detained. Investigators say he lured people with offers of “5G SIM upgrades,” misused their KYC documents, and activated SIM cards that were later used in cyber fraud. Some of these operations are believed to have been handled from outside India.

The CBI has stated that further investigation is ongoing to identify additional domestic and international collaborators and to dismantle the broader ecosystem supporting “Digital Arrest” scams. Officials said the focus is now on tracing crypto movements, communication trails, and the end beneficiaries of the fraud.

Day-old case highlights scale of crypto Ponzi schemes

The latest action comes a day after the Central Bureau of Investigation (CBI) registered another case on February 24, 2026, linked to digital currency Ponzi schemes involving crypto transactions of more than Rs. 350 crore (~$38.5M). 

In that case, seven people were booked for allegedly operating investment schemes that lured investors with promises of high returns through cryptocurrency.

During the investigation, search operations were conducted at 10 locations across seven states and Union Territories. These searches resulted in the seizure of about Rs. 34.2 lakh in cash and Virtual Digital Assets (VDAs) worth roughly $38,414 from cryptocurrency wallets connected to the accused.

Investigators said the accused were operating several bank accounts and crypto wallets to move and layer the proceeds of crime. 

Analysis of transactions showed that funds were repeatedly converted into cryptocurrencies to hide their source, with total activity crossing Rs. 350 crore over a two-year period. The schemes were run without approval from regulators, including the Reserve Bank of India.

Crypto scams under sharp focus in India

Taken together, the two cases underline a growing challenge for India’s digital financial system. From so-called “Digital Arrest” frauds targeting individual victims to large Ponzi schemes, cryptocurrencies are increasingly being used to move and hide illegal proceeds. 

Investigating agencies are now concentrating on following crypto transaction trails and breaking the support systems behind these scams. The focus has shifted beyond individual offenders to the networks, accounts, and technical infrastructure that allow such frauds to operate, as crypto-related scams continue to rise across the country.

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