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.
The charge sheet comes in the wake of allegations of investor duping under the guise of cryptocurrency mining, including Bitcoin. 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).
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. This action by the ED is rooted in a First Information Report (FIR) by the Cyber Crimes Unit of Kohima Police, which implicated various individuals in a scheme promising substantial returns through cryptocurrency mining. The Kohima Police revealed that the scammers used a mobile application dubbed “HPZ Token” to defraud investors.
Further investigations revealed the establishment of bank accounts and merchant IDs by “shell entities” with “dummy” directors intended for the “layering” of criminally obtained funds. These funds, according to the ED, were garnered through illicit online gaming, betting, and investments in Bitcoin mining, deceiving investors with the promise of high returns.
Specifically, an investment of INR 57,000 (approx. $688) was purported to yield daily returns of INR 4,000 (approx. $48.27) over three months, a promise unfulfilled after the initial payment. The ED’s nationwide search has led to the seizure of assets and deposits valued at INR 455 crore, approximately USD 546 million, the report added.
Additionally, the ED is 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, with INR 6,606 crore diverted for foreign property purchases through the companies under investigation.
These companies involved in the alleged laundering are located in Hong Kong, Dubai, and Estonia and include notable names such as Amaze Mining Blockchain Research Ltd and Crypto Capital, Estonia, among others. This probe is part of a broader effort by the Indian government to regulate the cryptocurrency market, following the Ministry of Finance’s actions against Binance and other offshore exchanges for non-compliance with anti-money laundering policies.
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 these non-compliant platforms, in line with the Prevention of Money Laundering Act (PMLA), marking a concerted effort to curb illegal activities in the cryptocurrency space.