The Enforcement Directorate (ED) has frozen ₹21.14 crore of online forex trading app M/s OctaFX and related entities which were held in various bank accounts after carrying out searches at their premises over allegations that the private firm's activity was in contravention of Foreign Exchange Management Act (FEMA).
The probe under FEMA revealed that the international brokers — working though OctaFx Trading App and website www.octafx.com — operated in India through the entity, M/s OctaFx India Pvt. Ltd. This forex trading platform is widely promoted on social networking sites and it has referral-based incentive models for bringing users to their platforms, the ED said in a statement. "It is observed that funds are collected from users, majorly through UPI/local bank transfers and are channelised through dummy entities. These funds are credited in the bank accounts of various dummy entities and domestically transferred to other banks for the purpose of layering and later on cross border transactions have been undertaken," the agency charged.
Not authorised by RBI
The ED said that the OctaFX app and its portal version have not been authorised by the Reserve Bank of India (RBI) to deal in forex trading so their "conduct and operations are illegal, and also violates FEMA regulations".
ED said that it has emerged in the investigation that multiple accounts of different Indian banks were shown to investors/users on OctaFx trading app and www.octafx.com for collecting funds under the guise of facilitating forex trading. The accumulated funds, after defrauding these investors/users, were simultaneously transferred to multiple e-wallet accounts such as Neteller, Skrill or to bank accounts of dummy entities, the ED alleged.
Further, a major portion of the defrauded amount was used to purchase crypto currencies and assets through M/s Zanmai Labs Pvt. Ltd, the agency stated. M/s Zanmai Labs provided banking channels and a bridge to deposit the cash to WazirX wallets which were subsequently transferred to Binance exchange, a crypto exchange based in Cayman Island, leading to transfer of the Indian currency to overseas entities in the form of crypto currencies, the sleuths stated.
Crackdown against Chinese firms
In another case, the ED has carried out fresh searches and attached ₹9.82 crore parked in different bank accounts of at least nine Chinese-controlled entities which came under the scanner during a probe relating to the misuse of app-based token, HPZ, and other similar applications. Now the total amount attached has gone up to ₹56.49 crore since the agency had earlier froze bank and virtual accounts holding ₹46.67 crore during the raids conducted on September 14.
The Chinese companies under the ED's radar include Comein Network Technology Private Limited, Mobicred Technology Private Limited, Magic Data Technology Private Limited, Baitu Technology Private Limited, Aliyeye Network Technology India Pvt Ltd, Wecash Technology Private Limited, Larting Private Limited, Magic Bird Technology Private Limited and Acepearl Services Private Limited.
The ED said it initiated money laundering investigation on the basis of an FIR, registered on October 8, 2021, under various sections of Indian Penal Code (IPC) by the Cyber Crime Police Station of Kohima, Nagaland, against HPZ token and others.
Modus operandi
The HPZ, as per the agency, had promised users large gains against investment which they had declared as “investing in mining machines for Bitcoin and other crypto currencies”. "The modus-operandi of the fraudsters were to first lure the victims to invest in their companies on the pretext of doubling/multiplying their investment through the HPZ app and other similar applications," the ED alleged.
The ED stated its investigation has exposed that various Chinese-controlled entities like Comein Network Technology Private Limited and others, entered into service agreements with various non-banking finance companies (NBFCs) which were operating multiple suspicious loan and others apps (such as Cashhome, Cashmart, Easyloan). They received funds from public on the pretext of operating these apps, the ED added.
Further investigation is under progress, the ED said.