A GUIDE FOR FINANCIAL FRAUD INVESTIGATION & PRECAUTION, SHIVANI SHARMA [read my book txt] 📗

to get killed.” However, owners and operators of bitcoin exchanges are of an entirely different opinion. Sandeep Goenka, Co- Founder and COO, Zebpay, says, “The comment from JP Morgan’s CEO was his personal view, and there is a possibility that he doesn’t understand the evolution of bitcoins. On the other hand, we have former Citigroup CEO Vikram Pandit investing in bitcoins.”The problem is apparent: If global bankers don’t understand the phenomenon, retail investors might not have much of a chance either. So what should you do? Follow the simple yet profund wisdom of Warren Buffett—if you don’t understand it, don’t invest in it.

4. An unregulated space:-Unlike other investment avenues, cryptocurrencies are not regulated by government entities or banks. “There is no authority like Sebi that you can approach for grievance redressal,” says Vikram Pandya, Director, Fintech, S.P. Jain School of Global Management. Sharma concurs, “If we buy something with a credit card and get ripped off, we can call the bank and ask to be compensated. But if we get ripped off in a bitcoin transaction, it is impossible to  to get the money back.” As Pethe has realised a little too late, therein lies the pain of investing through unregulated schemes. 

 

5. The issue of legality:-One major hurdle in the path of Indian investors who are interested in investing in cryptocurrency, is the confusion about its legal status. While they haven’t been declared illegal, cryptocurrencies are not recognised by the Reserve Bank of India (RBI) or any other authority in India, as a ‘currency’. In December 2013, the RBI issued a press release cautioning users, holders and traders of virtual currencies, including bitcoins, about the potential  financial, operational, legal, customer protection and security related risks. In its latest press release dated 1 February, 2017, the regulator has further stated that it has not issued licences to companies for trading in any virtual or digital currencies. RBI also added, that the user, holder, investor, trader, etc. dealing with virtual or digital currencies will be doing so at their own risk. However, bitcoin exchanges want to draw investors’ attention to the fact that the RBI has not banned them. “While the RBI has voiced its concerns, bitcoin transactions haven’t been rendered illegal. So, in our opinion, investors shouldn’t lose hope, just exercise caution,” says Hesham Rehman, Co-founder and CEO, Bitxoxo. 

 

6. Ponzi schemes abound:-Aside from the operational issues of trading in cryptocurrencies, there is also a high risk of fraud. There is still a good deal of misinformation and lack of clarity regarding bitcoin trading, and fraudsters have taken advantage of this to launch Ponzi schemes, which promise ‘guaranteed high returns’. Some companies claim to double the initial investment within a very short period of time. “The growing use of virtual currencies in the global marketplace makes it easy for miscreants to lure investors into Ponzi schemes. Investors should be careful to steer clear of such unrealistic promises,” says Rajendra K. Sinha, Professor and Chairperson, Centre of Excellence in Banking, IFIM Business School. “Keep in mind that bitcoins are highly volatile, so it’s not possible to offer guaranteed returns,” says Hesham Rehman, Co-founder and CEO, Bitxoxo. 

                                                                    Prakash Pillay learnt this the hard way. He invested Rs 5 lakh and accumulated 6.5 bitcoins through bitcoin trading company GainBitcoin in February 2017. Though he was able to recover Rs 3 lakh by selling one bitcoin in July, the company is no longer allowing him to sell the remaining bitcoins in his wallet. Instead, it is asking him to exchange them for MCAP, another cryptocurrency. “Gainbitcoin is a Ponzi scheme like Shavers and Gaw Miners. Investors should be careful to steer clear of such to steer clear of such schemes,” says Jaju.

7. Prone to illegal activityDue to the lack of government control, terrorists and extortionists are also utilising the cryptocurrency space to their advantage. “Bitcoins users on either end of a transaction can remain relatively anonymous and cybercriminals have found ways to mask their addresses, so it can be difficult for government authorities and companies to trace such illegal activities,” says Reshmi Khurana MD and Head of South Asia, Krollsays, a cyber security and risk consultation firm. Kishore Jeswani, 50, fell victim to such hacking in September 2016. Jeswani’s computer was remotely accessed and locked by hackers, who demanded a payment of three bitcoins. However, although Jeswani met their demands, they did not unlock his computer and he ended up losing his data anyway.

                                                 Incidents like this make it abundantly clear that it’s much more difficult to track illegal activities in the cryptocurrency space. “Since there is a lack of information about the trading parties, such a peer-topeer non-regulated system may expose the investors to unforeseen risks including breaches of anti-money laundering and financing of terrorism laws,” says Khurana. This risk also lowers the chances of cryptocurrencies becoming mainstream in India, leaving the future of the market mired in  uncertainity.

WHISTLE BLOWER

                                                     
1)WHAT IS WHISTLE BLOWER?:-

Whistleblowers are individuals who exposes information regarding any wrongdoing, any sort of corruption or mismanagement or fraud and reports such actions inside the organization to the Chief executive officer or to any senior management member unknown to be internal whistleblowers.  Where any individual who reports such kind of wrong doings outside the organization that is to the media, law enforcement agencies, etc. are known as the external whistleblowers.   In simple words whistleblowing is the act of exposing misconduct and any sort of malpractices, which is going within an organization. In India incidents of whistleblowing are few and they are far between. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally.  Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization such as an immediate supervisor.  Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization such as the media, government, law enforcement, or those who are concerned.  Whistleblowers, however, take the risk of facing stiff reprisal and retaliation from those who are accused or alleged of wrongdoing.

 

 

2)WHY PEOPLE CHOSE TO BE A WHISTLE BLOWER?:-

Deeper questions and theories of whistleblowing and why people choose to do so can be studied through an ethical approach. Whistleblowing is a topic of ongoing ethical debate.  Leading arguments in the ideological camp that whistleblowing is ethical maintain that whistleblowing is a form of civil disobedience, and aims to protect the public from government wrongdoing.

 

 

3)Origin of term:-

U.S. civic activist Ralph Nader is said to have coined the phrase, but he in fact put a positive spin on the term[8] in the early 1970s to avoid the negative connotations found in other words such as "informer" and "snitch".However, the origins of the word date back to the 19th century. The word is linked to the use of a whistle to alert the public or a crowd about a bad situation, such as the commission of a crime or the breaking of rules during a game.  The phrase whistle blower attached itself to law enforcement officials in the 19th century because they used a whistle to alert the public or fellow police. Sports referees, who use a whistle to indicate an illegal or foul play, also were called whistle blowers. An 1883 story in the Janesville Gazette called a policeman who used his whistle to alert citizens about a riot a whistle blower, without the hyphen. By the year 1963, the phrase had become a hyphenated word, whistle-blower. The word began to be used by journalists in the 1960s for people who revealed wrongdoing, such as Nader. It eventually evolved into the compound word whistleblower

 

 

4)Internal WHISTLEBLOWER-:

Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or superior within their company through anonymous reporting mechanisms often called hotlines. One of the most interesting questions with respect to internal whistleblowers is why and under what circumstances do people either act on the spot to stop illegal and otherwise unacceptable behavior or report it. There are some reasons to believe that people are more likely to take action with respect to unacceptable behavior, within an organization, if there are complaint systems that offer not just options dictated by the planning and control organization, but a choice of options for absolute confidentiality. Anonymous reporting mechanisms, as mentioned previously, help foster a climate whereby employees are more likely to report or seek guidance regarding potential or actual wrongdoing without fear of retaliation. The coming ISO 37001 – anti-bribery management systems standard, includes anonymous reporting as one of the criteria for the new standard.

 

 

5)External Whistleblower:-

External whistleblowers, however, report misconduct to outside persons or entities. In these cases, depending on the information's severity and nature, whistleblowers may report the misconduct to lawyers, the media, law enforcement or watchdog agencies, or other local, state, or federal agencies. In some cases, external whistleblowing is encouraged by offering monetary reward.

 

 

6)Third party:-

The third party service involves utilizing an external agency to inform the individuals at the top of the organizational pyramid of misconduct, without disclosing the identity of the whistleblower. This is a relatively new phenomenon and has been developed due to whistleblower discrimination. International Whistleblowers is an example of an organization involved in delivering a third party service for whistleblowers. An increasing number of companies and authorities use third party services in which the whistleblower is anonymous also towards the third party service provider. This is possible via toll free phone numbers configured not to record the whistleblower origin call, and also through web solutions which apply asymmetrical encryption.

 

 

7)Private sector whistleblowing:-

Private sector whistleblowing, though not as high profile as public sector whistleblowing, is arguably more prevalent and suppressed in society today. Simply because private corporations usually have stricter regulations that suppress potential whistleblowers. An example of private sector whistleblowing is when an employee reports to someone in a higher position such as a manager, or a third party that is isolated from the individual chapter, such as their lawyer or the police. In the private sector corporate groups can easily hide wrongdoings by individual branches.  It is not until these wrongdoings bleed into the top officials that corporate wrongdoings are seen by the public. Situations in which a person may blow the whistle are in cases of violated laws or company policy, such as sexual harassment or theft.  These instances, nonetheless, are small compared to money laundering or fraud charges on the stock market.  Whistleblowing in the private sector is typically not as high-profile or openly discussed in major news outlets, though occasionally, third parties expose human rights violations and exploitation of workers. While there are organizations such as the United States Department of Labor (DOL), and laws in place such as the Sarbanes-Oxley Act and the United States Federal Sentencing Guidelines for Organizations (FSGO) which protects whistleblowers in the private sector, many employees still fear for their jobs due to direct or indirect threats from their employers or the other parties involved.  In an effort to