Delhi HC denies bail to two CAs in ₹640-crore cyber fraud case

The ED alleged that the two were involved in large-scale laundering and siphoning off public money by duping innocent citizens through fraudulent investment schemes, betting and gambling platforms.

Delhi High Court on Monday denied anticipatory bail to two chartered accountants (CAs) who allegedly arranged mule bank accounts to launder proceeds of crime in a ₹640-crore cyber fraud, observing that the case revealed an intricate web of money movement fraudulently siphoned from gullible middle-class investors.

The case revealed an intricate web of money movement fraudulently siphoned from gullible middle-class investors.

“The present cases exhibit a vast intricate mesh of movement of money, fraudulently extracted out of the pocket of gullible investors, who appear to be primarily belonging to the middle class. It is the hard-earned money of the victims, whose only fault was that they wanted their money to multiply through investments, and this basic desire (or call it human weakness) of theirs was exploited by some fraudsters, luring them to invest in various schemes, which were actually fraudulent. It is not a simple case of the accused/applicants investing in cryptocurrency,” Justice Girish Kathpalia said in the order dated February 2.

Acting on a Central Bureau of Investigation’s (CBI’s) FIR filed under the Indian Penal Code and the Information Technology Act in August 2022, the Enforcement Directorate (ED) registered a case against the two suspects, Bhaskar Yadav and Ashok Kumar Sharma, in March 2024.

The ED alleged that the two were involved in large-scale laundering and siphoning off public money by duping innocent citizens through fraudulent investment schemes, betting and gambling platforms, phishing operations and fake part-time job offers.

According to the CBI, funds received in primary bank accounts were diverted to multiple accounts across the country and layered through several mule accounts to conceal their origin. The proceeds of crime were subsequently withdrawn through overseas ATMs, primarily in Dubai, or routed through foreign fintech platforms, including payment platform PYYPL, which provides internationally accepted MasterCards linked to Visa and MasterCards issued by Indian banks.

The enforcement agency claimed that the two men played a major role in arranging the mule accounts and laundering proceeds of crime after converting the same into cryptocurrency.

In their petition, the two accused, represented by senior advocate Manu Sharma, contended that the case pertained merely to dealings in cryptocurrency, which was not an offence in India, particularly after the Supreme Court quashed the RBI’s ban on cryptocurrency and the Finance Act, 2022, subsequently imposed a tax on crypto transactions.

Opposing the bail pleas, ED counsel Vivek Gurnani alleged that the two accused had not only wiped data from their electronic devices to destroy evidence, but had also assaulted ED officials and attempted to bribe local police officers to compel complainants to settle the dispute.

Gurnani further submitted that custodial interrogation was necessary as the accused were skilled professionals who had allegedly engineered the laundering of proceeds of crime through multiple layers, and that effective investigation would not be possible if they were granted pre-arrest protection.