ED raids 21 locations in crypto-based investment scam probe

The searches were held at 21 locations on Thursday, at the official and residential premises of the case’s accused persons and entities, including M/S 4th Bloc Consultants

MUMBAI: The Enforcement Directorate (ED) on Thursday carried out searches at multiple locations in Maharashtra, Karnataka and Delhi as part of its money-laundering investigation into an alleged financial fraud involving crypto-currency-based investment platforms that duped investors in India and abroad. Crypto-currency is a type of virtual currency that is not legal tender in India.

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The searches were held at 21 locations on Thursday, at the official and residential premises of the case’s accused persons and entities, including M/S 4th Bloc Consultants, under the provisions of the Prevention of Money Laundering Act (PMLA). The ED probe revealed that the platforms were fake and had copied genuine investment platforms while promising attractive returns to gullible investors.

On suspicion that the case’s proceeds of crime (POC) were being utilised by accused persons to amass movable and immovable properties in India and abroad, the ED searches focussed on tracing such assets. Some of the properties were identified during the searches as well as a few crypto-wallet addresses of accused persons that were used to receive and utilise the POC, ED officials said. Most of the accused persons in the case had foreign bank accounts and used foreign entities to launder the POC.

The searches were conducted after the ED began its initial probe, based on a case registered by the Karnataka police. The police case centred around a large-scale organised financial fraud involving crypto-currency-based investment platforms operated by accused persons that targeted foreign nationals and Indian citizens, and collected funds in the form of crypto-currency through the websites designed by the accused.

The ED searches disclosed the modus operandi employed in the case, which included the alleged creation of fake crypto-currency investment platforms mimicking genuine platforms, and the advertisement of high and quick returns to target gullible investors from India and abroad. Photographs of reputed crypto experts and famous personalities were used allegedly without obtaining their consent.

Initial investors in the schemes were allegedly paid some returns to gain their trust and attract more investors. Referral bonuses were allegedly offered, and promotions were carried out on social media platforms to attract unsuspecting investors.

The ED probe revealed that foreign-based bank accounts and firms were set up to handle the POC generated in the case, and unauthorised channels, including hawala, were used to move funds, officials said. The modus operandi has allegedly been in operation since 2015.