The Enforcement Directorate Files Charge Sheet Against 299 Entities in Cryptocurrency Scam
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. This development was officially announced following the special court in Dimapur, Nagaland’s acknowledgment of the prosecution complaint under the Prevention of Money Laundering Act (PMLA).
Allegations of Investor Duping and Cryptocurrency Mining Scheme
The charge sheet comes in the wake of allegations of investor duping under the guise of cryptocurrency mining, including Bitcoin. According to a report from a local publication, the charge sheet includes 76 entities under the control of Chinese nationals, featuring 10 directors of Chinese descent, along with two entities managed by nationals from other countries.
- The ED’s action is based on an FIR by the Cyber Crimes Unit of Kohima Police.
- The scheme promised substantial returns through cryptocurrency mining.
- Scammers used a mobile application called “HPZ Token” to defraud investors.
Establishment of Shell Entities and Layering of Criminally Obtained Funds
Further investigations revealed that the scammers had established bank accounts and merchant IDs through “shell entities” with “dummy” directors. These entities were created for the purpose of “layering” criminally obtained funds. The funds were acquired through illicit online gaming, betting, and investments in Bitcoin mining, deceiving investors with high return promises.
- Investors were promised daily returns but received none after the initial payment.
- The ED’s nationwide search resulted in the seizure of assets and deposits worth INR 455 crore (USD 546 million).
Investigation into Overseas Companies Involved in Bitcoin-based Ponzi Scheme
The ED is also scrutinizing 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. The laundered funds, amounting to INR 6,606 crore, were diverted for foreign property purchases through the companies under investigation.
- The companies involved in the alleged laundering are located in Hong Kong, Dubai, and Estonia.
- Notable names among these companies include Amaze Mining Blockchain Research Ltd and Crypto Capital, Estonia.
Indian Government’s Efforts to Regulate the Cryptocurrency Market
This probe is part of a broader effort by the Indian government to regulate the cryptocurrency market. 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 protect local investors from non-compliant platforms, in line with the Prevention of Money Laundering Act (PMLA).
- The Ministry of Finance has taken actions against Binance and other offshore exchanges for non-compliance with anti-money laundering policies.
- The Indian government aims to curb illegal activities in the cryptocurrency space.
Hot Take: Crackdown on Cryptocurrency Scams Continues in India 🚀
The recent charge sheet filed by the Enforcement Directorate against 299 entities involved in a cryptocurrency scam highlights India’s determination to crack down on illegal activities in the crypto market. By taking action against individuals and companies engaged in money laundering and fraudulent schemes, the government aims to protect investors and regulate the industry.
With ongoing investigations into overseas companies and their role in laundering funds, it is clear that India is not only targeting domestic offenders but also those operating from abroad. This demonstrates a commitment to international cooperation in combating cryptocurrency scams.
The steps taken by India’s Financial Intelligence Unit to issue compliance notices to non-compliant exchanges further emphasize the government’s efforts to ensure a safe and transparent crypto ecosystem. By holding exchanges accountable for anti-money laundering policies, India aims to safeguard its investors from potential risks.
As the Indian government continues its crackdown on cryptocurrency scams, it sends a strong message to both domestic and international actors: illegal activities will not be tolerated in the crypto space. This proactive approach sets a precedent for other countries grappling with similar challenges and paves the way for a more secure and regulated cryptocurrency industry.
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