₹50 Crore Fake IPO Scandal Uncovered: Two Directors Arrested

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Summary: Rajasthan Police have arrested two executives of a fraudulent financial enterprise involved in a ₹50 crore scheme using deceptive IPO transactions and investment scams.

The Arrest and Investigation

Rajasthan Police have detained two senior executives of a fraudulent financial enterprise for orchestrating a ₹50 crore scheme involving deceptive initial public offering transactions and investment scams targeting a national audience. The State Cyber Crime Police Station in Rajasthan dismantled a multi-state cybercrime network that allegedly defrauded investors of approximately ₹500 million.

During a coordinated enforcement action, law enforcement officials apprehended Devendra Sharma and Nikhil Luthra, key figures in a Delhi-based entity known as Terrapulse Private Limited. The pair, originating from Najafgarh in Delhi, were detained in Faridabad, Haryana, where they were allegedly managing the illicit operations.

The Victim’s Experience

This arrest marks a significant milestone in the state’s efforts to address the growing prevalence of digital financial fraud across the country. The investigation began after a formal report was submitted by Dr. Nikhil Mehta, a Jaipur-based medical professional, who lost ₹61.77 million through a fraudulent online platform operating under the name Vikasa Capital.

The perpetrators initially contacted the victim via targeted social media advertisements before shifting communication to encrypted messaging services such as and Telegram. Posing as experienced financial analysts, the syndicate convinced the doctor to participate in what they claimed was a high-reward investment opportunity.

Operational Framework and Financial Mechanisms

The operational framework of this criminal enterprise relied on a systematic approach of psychological manipulation and fabricated financial success. To gain the victim’s trust, the platform allowed small withdrawals, creating the illusion of legitimate returns. Subsequently, the victim was persuaded to invest substantial sums into what was presented as an exclusive opportunity to access restricted market segments.

This case highlights a concerning trend in India’s retail investment sector, where cybercriminals are transitioning from basic phishing tactics to developing sophisticated, interactive applications that mimic genuine brokerage interfaces. By employing terminology associated with institutional trading, these platforms successfully deceive even well-educated individuals, including medical professionals and engineers.

Financial Laundering and Regulatory Gaps

The investigation revealed complex financial mechanisms used to obscure the flow of illicit funds. According to V. K. Singh, Additional Director General of Cyber Crime for Rajasthan, the accused funneled the stolen money through current accounts held with multiple private banking institutions. These accounts have been directly linked to over ₹250 million in suspicious transactions.

Additionally, national records indicate that the company’s banking activities are connected to more than 250 complaints on the National Cyber Crime Reporting Portal. This high volume of reports has resulted in over 50 First Information Reports filed across various states.

The case underscores vulnerabilities in corporate registration and banking Know Your Customer protocols, which enable shell companies to maintain active business accounts.

Regulatory Response and Expert Advice

The Jaipur operation occurs amid a broader regulatory initiative by the Securities and Exchange Board of India to combat fraudulent financial intermediaries. In late 2025, the market regulator launched the “SEBI vs SCAM” campaign in collaboration with major stock exchanges to educate novice investors.

This effort was complemented by the “Verified App Label Initiative” in early 2026, aimed at identifying and removing unverified financial platforms from mobile application stores.

Social Engineering and Investor Protection

Cybersecurity expert and former IPS officer Professor Triveni Singh noted that these scams primarily succeed through social engineering rather than technical breaches. By offering access to exclusive block deals, high-capacity stocks, and pre-allocated IPOs, fraudsters exploit the retail investor’s fear of missing out on rapid wealth generation.

Professor Singh advised the public to verify the SEBI registration of any financial entity before transferring funds, emphasizing that legitimate market participants never request direct bank transfers to individual current accounts.

Conclusion

The Rajasthan Police’s arrest of Devendra Sharma and Nikhil Luthra highlights the escalating threat of digital financial fraud in India. As cybercriminals adopt sophisticated tactics, regulatory bodies and cybersecurity experts are working to protect investors through education, enforcement, and technological safeguards.