Jai Sahu
The Enforcement Directorate (ED) has taken a significant step in its ongoing investigation into a cryptocurrency scam by filing a charge sheet against 299 entities, including individuals of Chinese origin, under the anti-money laundering law.
Exposing the Cryptocurrency Fraud Scheme
This charge sheet follows allegations of investor deception related to cryptocurrency mining, including Bitcoin. The official announcement of this development came after the special court in Dimapur, Nagaland, acknowledged the prosecution complaint under the Prevention of Money Laundering Act (PMLA).
As per a report from a local publication, the charge sheet includes 76 entities under the control of Chinese nationals, with 10 directors of Chinese descent, along with two entities managed by nationals from other countries. This action by the ED stems from a First Information Report (FIR) by the Cyber Crimes Unit of Kohima Police, which implicated various individuals in a scheme promising substantial returns through cryptocurrency mining. The scammers reportedly used a mobile application called “HPZ Token” to defraud investors.
Cryptocurrency Scam Unveiled
Further investigations unveiled the establishment of bank accounts and merchant IDs by “shell entities” with “dummy” directors intended for the “layering” of criminally obtained funds. According to the ED, these funds were acquired through illicit online gaming, betting, and investments in Bitcoin mining, deceiving investors with the promise of high returns.
Specifically, an investment of INR 57,000 (approx. $688) was promised to yield daily returns of INR 4,000 (approx. $48.27) over three months, a promise that remained unfulfilled after the initial payment. The ED’s nationwide search has resulted in the seizure of assets and deposits valued at INR 455 crore, approximately USD 546 million, as per the report.
Moreover, the ED is examining nine overseas companies for their role in laundering funds from a Bitcoin-based Ponzi scheme run by Variable Tech Pte Ltd, based in Singapore. This scheme amassed 80,000 bitcoins by deceiving investors with high-return promises, with INR 6,606 crore diverted for foreign property purchases through the companies under investigation.
India Targets Global Firms in Crypto Regulation Drive
These companies involved in the alleged laundering are situated in Hong Kong, Dubai, and Estonia, and include notable names such as Amaze Mining Blockchain Research Ltd and Crypto Capital, Estonia, among others. This investigation is part of a broader effort by the Indian government to regulate the cryptocurrency market, following the Ministry of Finance’s actions against Binance and other offshore exchanges for non-compliance with anti-money laundering policies.
In December, compliance notices were issued to several exchanges, including Binance, KuCoin, and Huobi, by India’s Financial Intelligence Unit (FIU). The FIU is taking measures to safeguard local investors from these non-compliant platforms, in line with the Prevention of Money Laundering Act (PMLA), reflecting a concerted effort to curb illegal activities in the cryptocurrency space.