Forex trading fraud: youth in Karachi falling into debt trap

KARACHI: In Karachi, young people are being lured by the promise of becoming millionaires overnight, but they find themselves sinking deeper into debt in the name of forex trading.

According to the Federal Investigation Agency (FIA), several cases have been reported in which parents stated that their children were enticed into online businesses and are now being blamed by these companies for financial losses. They say that these companies, at the end, demand refund from the youth involved in the forex trade by blackmailing them, citing loss.

Mohammad Qasim (a pseudonym), a resident of Karachi’s Buffer Zone, told Urdu News his worries after two of his son’s cheques bounced, and a case was registered against him by the company he was working for. His son, Muhammad Junaid, works in the quality control department of a private company and has three children. A few days ago, Junaid secured a job in the IT company in the upscale Defence area of Karachi.

“After completing his BS from Urdu University, my son and our entire family were overjoyed when he got the IT job,” Qasim said.

“Junaid mentioned that his work was going well, and he was earning a good commission along with his salary. He was hopeful for a substantial income at the end of the month. He handed his first salary, which was more than my years of earnings, to his mother.”

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He said that this went on for a few months, and the family’s conditions began to improve. However, one day, Junaid came home visibly distressed. He isolated himself in a room and did not eat. Upon inquiry, he initially attributed his anxiety to work pressure. However, a week later, he talked about suffering significant financial losses at work. The company demanded he bore these losses, threatening to deposit his cheques, which could lead to a criminal case if they bounced.

Another similar incident in Karachi involved Zubair Ali (a pseudonym), who wrote an open letter to high-ranking officials, describing how his son fell into the same trap. Ali explained that youths are lured by luxurious offices in posh areas and receive a month of training in crypto trading. During this period, they are given VIP treatment, including lavish lunches and dinners, and are constantly enticed by agents.

“They initially practice on a dummy account,” Ali said.

“Once trained, their bank accounts are opened, making them feel invincible. They sign multiple cheques of the employees, which are then used to deposit dollars for trading, dividing 80 per cent to the owner and 20 per cent to the employee. The owner controls the trading account, earning profits until a seemingly loss occurs. Initially, the owner reassures the youth by covering the losses, but ultimately, the youth are forced to bear the financial burden,” he said.

Ali noted that when a young employee wants to quit due to fear of losses, they are trapped and threatened in bounced cheque cases and pressured to sell their property. This mental torture often leads to suicide or continuous blackmailing.

A senior FIA officer, confirmed that the agency receives complaints from victims of online trading scams. Young people are not only financially ruined but also see their careers destroyed, he said.

“Online trading happens worldwide, but there are regulations. In Pakistan, naive youth are misled with false promises. In case of profit, company owners get happy, but in case of loss, they shift all responsibility to the youth,” the officer said. “There are laws in Pakistan to address this, but public awareness is lacking. A small mistake can lead to major trouble,” he said.

Regarding this year’s reported cases, the officer mentioned that they have been lodged across different FIA cells but many victims do not report the fraud. He said that cheque bounce cases are also handled by the police, further complicating the issue.

The FIA official said that such cases are not just in dozens but in hundreds.