OctaFX case: Portion of funds collected for forex trading used to purchase crypto assets
ED's investigation into OctaFx revealed funds from forex trading were used to buy cryptocurrencies & transferred abroad. Accused of duping investors of over ₹500 crore.
MUMBAI: The Enforcement Directorate’s (ED’s) money-laundering investigation into OctaFx, an online trading platform, has revealed that a substantial portion of the funds allegedly collected via its app on the pretext of facilitating forex trading was used to purchase cryptocurrencies.
The funds were transferred via e-wallets to a Cayman Islands-based crypto exchange, from where they were routed to overseas entities, ED sources said. A cryptocurrency is a decentralised virtual currency that isn’t legal tender in India.
ED began its investigation based on a First Information Report registered against the platform by the Pune police under various sections of the Indian Penal Code and the Maharashtra Protection of Interest of Depositors (MPID) Act.
Multiple individuals have been accused of duping people into forex trading through OctaFx. The Pune police had alleged that the accused entities had cheated investors of over ₹500 crore through illegal forex trading. A part of this amount was transferred abroad through complex transactions disguised as bogus freight services and other means.
ED’s probe revealed that multiple accounts from different Indian banks were allegedly shown to users on the OctaFx trading app and website to collect funds on the pretext of facilitating forex trading. After allegedly defrauding the investors, the accumulated funds were transferred to multiple e-wallet accounts or the bank accounts of dummy entities for diversion, sources said.
The police alleged that the Saint Lucia-registered company and its Indian entity, OctaFX India Pvt Ltd, cheated investors of over ₹500 crore through illegal forex trading. A part of this amount was transferred abroad through complex transactions disguised as bogus freight services and other means.
A major portion of the defrauded money was used by the agents of OctaFx to create personal wealth, sources said. The investigation also revealed that OctaFx was widely promoted on social networking sites and allegedly followed a referral-based incentive scheme to attract new users.
The agency had initially probed OctaFx and related entities under the provisions of the Foreign Exchange Management Act (FEMA). It had frozen account balances worth ₹21.14 crore belonging to OctaFX and related entities in various bank accounts in September 2022 after conducting searches at its associated premises.
In February 2023, the Reserve Bank of India had included OctaFX in its alert list of unauthorised entities. The list includes three entities related to OctaFx, sources said.
In April this year, ED seized bank funds worth ₹2.7 crore during searches carried out in four metro cities, including Mumbai. The agency has also taken under its scanner a network of chartered accountants and professionals who allegedly provided fake certificates of remittances and facilitated bank accounts/firms for parking funds. In April 2023, the ED had provisionally attached movable and immovable properties worth ₹34.75 crore. The attachments included bank balances, cryptocurrencies, vehicles, gold coins and cash.