Adv. Siby Varghese — Cybercrime Attorney & Founder, SHIELD Law Firm: Forex Scams in India — How They Work and What Legal Action You Can Take (2025)

Forex trading has a great return promise; the area is, however, also replete with scams in India.  Thousands of people have been victims of illegal forex trading, gene brokers, and fraudulent investment schemes.

What is Forex Trading?

Forex trading is the exchange of currencies in the global marketplace. Traders try to profit by buying a currency low and selling it high against another. While forex trading is legal in India under strict guidelines through authorized platforms regulated by the Reserve Bank of India (RBI) and SEBI, many scams operate outside this framework.

How Forex Scams Work in India

Scammers target people who are unaware of the legal limitations on forex trading in India. Here’s how these scams typically operate:

1. Fake Platforms and Apps

Scammers set up fake websites or mobile apps that look like real trading platforms. They claim to offer high returns, free tutorials, and guaranteed profits. Victims invest money thinking it’s a legitimate forex trade.

2. Social Media Promotions

Many scams are advertised via Instagram, WhatsApp, Telegram, and YouTube, where influencers or fake profiles show fake profits. They convince people to join private groups or pay “joining fees” to get forex signals.

3. Ponzi Schemes

Some fraudsters run forex-based Ponzi schemes, where new investors’ money is used to pay returns to earlier investors. Eventually, the scheme collapses and most people lose their money.

4. Unauthorized Brokers

These brokers claim to be international or SEBI-approved, but they are not. They use foreign websites, unregulated platforms, and sometimes even clone real broker websites.

5. Fake Customer Support and Withdrawals

Victims may see fake profits on their dashboards but cannot withdraw their money. When they try, scammers demand more payments in the name of taxes or processing fees — a red flag.

Is Forex Trading Legal in India?

Only currency pairs approved by the RBI (like USD/INR, EUR/INR, GBP/INR, and JPY/INR) can be traded in India and only on regulated exchanges like NSE, BSE, and MCX-SX.

Trading through international brokers or apps not registered with SEBI is illegal under the Foreign Exchange Management Act (FEMA).

Legal Consequences for Scammers

According to Adv. Siby Varghese, multiple Indian laws can be used to act against forex scammers:

1. Bharatiya Nyaya Sanhita (BNS)

• Section 318(4) – Cheating and Inducing Delivery of Property

If a scammer cheats someone into giving money for forex investment through lies or false claims, this section applies. Punishment includes imprisonment and a fine.

• Section 420 (Earlier IPC) – Fraud and Deceit

Those who promise profits and take money dishonestly may be charged with fraud under the equivalent BNS section.

2. Information Technology Act, 2000

• Section 66D – Impersonation Using Electronic Means

If a scammer uses fake profiles or impersonates a real broker online, this section applies. Punishment: up to 3 years of jail and fine.

• Section 43 and 66 – Hacking and Data Theft

If scammers hack into bank accounts, apps, or misuse personal data, they can be charged under this.

3. FEMA (Foreign Exchange Management Act)

Trading on unauthorized foreign forex platforms is a violation of FEMA regulations. SEBI and RBI regularly issue warnings and notices against illegal platforms.

4. Consumer Protection Act, 2019

If someone is misled by false advertising or unfair trade practices, a case can be filed in Consumer Court for compensation.

5. RBI and SEBI Guidelines

Investors should report to RBI, SEBI, and Cyber Crime Cells if they are duped. SEBI has banned many illegal platforms and regularly issues advisories.

What Should You Do If You Are a Victim?

Here are the steps suggested by Adv. Siby Varghese:

• Collect Evidence: Save chat screenshots, emails, transaction details, account numbers, and app screenshots.
• File a Cybercrime Complaint: Go to the National Cyber Crime Reporting Portal and file a complaint.
• Report to RBI or SEBI: Notify RBI if an illegal forex platform is involved. SEBI can take action against unauthorized brokers.
• Legal Notice: Send a legal notice to the scammer if known. A lawyer can help draft it professionally.
• Approach the Police: File an FIR at your local police station under cheating, fraud, and cybercrime sections.
• File a Consumer Complaint: If you were misled by a company or app, you can approach a consumer forum for compensation.

Tips to Avoid Forex Scams

• Never trust “guaranteed returns” in forex
• Avoid foreign trading apps not registered with SEBI
• Do not pay joining or processing fees upfront
• Verify SEBI registration of the broker
• Ignore Telegram/Instagram forex investment groups
• Always trade through RBI-approved Indian platforms

Real-Life Cases

• In 2023, an illegal forex app named “FXTradePro” scammed over ₹100 crore from Indian investors before vanishing.
• In 2024, SEBI blacklisted 15 foreign forex platforms, warning users against them.
• Victims across cities like Mumbai, Delhi, Bengaluru, and Hyderabad have filed police complaints but many are still fighting to recover their money.

Forex scams in India are growing fast, especially among youth looking for quick money. These scams use technology, fake influencers, and psychological tricks to cheat people.

As Adv. Siby Varghese rightly states, “Awareness is the first step to prevention, but strong legal action is necessary to stop these scammers.” Victims must come forward, report the frauds, and use the legal protections available in India.

Need Legal Help?

SHIELD Law Firm, led by Adv. Siby Varghese, provides expert legal services for victims of online scams, including forex fraud, crypto fraud, and cybercrime. If you or someone you know has been cheated, get in touch for immediate support and recovery.