By the people, for the scam: Inside a digital wallet app's Rs 1,200-crore scam

Police allege that SD Pay used a digital wallet interface to collect investments from people across the country. Users were shown wallet balances and promised 9% monthly cashback. The app therefore appeared to offer a financial product, while investigators say it was being used to run a multi-level marketing operation. This matters because the displayed returns helped build trust and attract more money.

Existing investors became the main route to new investors. They promoted the app to relatives, friends and colleagues, then earned benefits through a 15-tier referral structure. A Gujarat teacher invested Rs 9.5 lakh, shared her apparent returns, and helped bring many people into the network. Her wallet later showed about Rs 50 lakh, but she could not withdraw it after the app shut down.

Amreli Police estimated that 6.52 lakh people were affected across 36 states and Union Territories. Investigators put the alleged collection at around Rs 1,211 crore. The case shows how a familiar app and visible returns can turn investors into recruiters, spreading an alleged fraud through personal trust.

A multi-level marketing or referral scheme grows through participants who recruit others. New members join beneath earlier members, creating layers of relationships. In a legitimate referral programme, rewards may be limited and tied to a real product or service. In an alleged pyramid-style operation, recruitment and incoming money can become more important than genuine business activity.

SD Pay reportedly used 15 referral levels. Investors could bring in family, friends and acquaintances, then receive benefits linked to activity in their wider network. The Gujarat teacher’s experience shows the mechanism. After investing Rs 9.5 lakh and seeing apparent returns, she promoted the app. She said about 800 people eventually joined through her referral network.

Police allege that new money helped sustain payments and confidence among existing investors. That made recruitment central to the system. The larger the network became, the more widely the app spread. The article does not establish whether every participant understood the alleged structure or intended to deceive others.

The reported scale was national, not local. Amreli Police said 6.52 lakh people invested in SD Pay across 36 states and Union Territories. Investigators estimated that around Rs 1,211 crore had been collected. These figures matter because they show how quickly an app-based scheme can spread beyond the people who first encountered it.

The app was downloaded nearly 1.5 million times. Police initially estimated a smaller operation, involving about 3.15 lakh people and Rs 635 crore. A wider investigation later produced the larger figures. The difference shows how the apparent size of the network became clearer as investigators examined more information.

Downloads and investors are different measures. A download does not prove that someone invested, while an investment count does not necessarily identify every person who downloaded the app. Even so, the figures indicate substantial reach. The article describes the alleged fraud as affecting people across the country, with investors helping extend its referral network.

People recruited relatives, friends and colleagues because the scheme linked benefits to network growth. Personal relationships also made the pitch more convincing. Someone who appeared to be receiving returns could reassure people who might distrust a stranger’s advertisement. This mattered because existing investors became the scheme’s distribution channel.

SD Pay promised 9% monthly cashback on wallet balances. The Gujarat teacher said she sometimes earned as much as Rs 25,000 through interest and referral cashback. She shared her apparent success on social media, and 31 people invested through her network, including 11 family members and 20 associates. She later said around 800 people joined more widely.

The wallet figures reinforced confidence. By mid-2026, her balance showed about Rs 50 lakh, although she could not withdraw it after the app shut down. Police allege that incoming money helped maintain payments to existing investors. Thus, apparent returns encouraged both further investment and further recruitment.

A scheme that depends on new investors’ money needs a continuing flow of fresh deposits. Police allege that SD Pay used money entering the system to sustain payments to existing investors. That means the apparent returns may depend less on genuine profits and more on continued recruitment. This is why a slowdown in new membership can matter quickly.

When fewer people join, less money is available to support earlier payouts, cashback or withdrawal requests. Confidence may then fall, causing more investors to seek their money at once. The article describes the teacher’s wallet as showing about Rs 50 lakh, but she could not withdraw it after the app shut down. The displayed balance did not guarantee access to cash.

In general, such pressure can lead to delayed payments, blocked withdrawals or collapse. The article does not state exactly what happened to every investor after the shutdown. It does show the central risk alleged by police: a system built around fresh money becomes vulnerable when recruitment slows or stops.

A digital wallet balance is a record shown by an app. It represents real funds only when the provider has matching money, keeps accurate records and allows lawful withdrawals. An on-screen figure can therefore differ from cash that is actually available. The SD Pay case highlights this distinction because a large displayed balance did not guarantee payment.

The teacher’s wallet showed around Rs 50 lakh by mid-2026. After the app shut down, she was unable to withdraw it. Police allege that SD Pay used incoming money to sustain payments to existing investors, which could make displayed returns look genuine while the system continued receiving deposits. The article does not establish the precise status of the underlying funds.

This means users must distinguish between an app’s statement and accessible money. Independent custody, clear withdrawal rules and verifiable records are important safeguards. In the alleged SD Pay operation, the inability to withdraw exposed the gap between a balance displayed on a screen and funds available to the account holder.

A legitimate wallet normally records money held for users, while a legitimate investment product explains where money goes, what risks exist and how returns are generated. A Ponzi or pyramid scheme, by contrast, may depend heavily on new participants’ money or recruitment. The article presents police allegations about SD Pay, but does not determine whether it was legally a Ponzi or pyramid scheme.

Independent audits can compare reported balances with actual funds, transactions and liabilities. Regulation can impose licensing, disclosure, custody and reporting requirements, depending on the product and jurisdiction. These checks can help reveal whether promised returns are supported by genuine assets or business activity. They do not automatically guarantee that users will never lose money.

SD Pay was presented as a digital wallet, promised 9% monthly cashback and used a 15-tier referral network. Police allege that incoming money sustained payments. The article does not provide audit findings or regulatory determinations. Those records would be needed to distinguish the app’s legal and financial structure from the allegations.