Chinese companies used to cheat crores through fake loan app; Know what was the whole game, how ED busted it

Intensifying its crackdown on cryptocurrencies that have direct links with Chinese loan apps harming Indian citizens, the Enforcement Directorate has conducted searches in 9 cities and 16 different locations, including Mumbai. These include payment gateways of various entities linked to banks and involved in illegal loan app scams. During the raids, the agency has seized Rs 46.67 crore deposited in various virtual accounts.

According to the Enforcement Directorate, the agency initiated money laundering investigation on the basis of an FIR registered by the Cyber ​​Crime Police Station, Kohima, Nagaland under various sections of the IPC. The ED, in its statement, said that raids were conducted in connection with the investigation at 16 premises of banks/payment gateway branches/offices in Delhi, Ghaziabad, Mumbai, Lucknow, Gaya, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bengaluru. Went. The investigation pertains to app-based tokens called HPZs and related entities.

How did the whole game go?

According to the agency, the HPZ token was an app-based token that promised users substantial returns from investing in mining for bitcoin and other cryptocurrencies. Fraudsters were the first to lure victims to double their investment through the HPZ Token app to invest in the company. Money was taken from users through payment gateways, nodal accounts and individuals other than UPI. Some amount was refunded to the investors and the balance was transferred through various payment gateways/banks to the accounts of different individuals and companies, from where part of it was withdrawn in digital/virtual currencies.

This is how money was raised

After that the fraudsters stopped the payment and the website was blocked, the ED said. During investigation, the agency found that the HPZ token was operated by Chinese controlled companies M/s Lilian Technocab Pvt Ltd and M/s Shigu Technology Pvt Ltd. The investigation further revealed that M/s Shigu Technology has links with several other Chinese-run companies. Several more companies were also involved in extorting money from the public on the pretext of operating various loan apps, websites and gaming apps, officials said.

Indian companies were also involved

As soon as the agency started a deep investigation to find out the involvement of Indian companies helping Chinese companies, the agency suspected a Gurugram based company M/s Jillian Consultants India Pvt Ltd. Another company M/s Mad-Elephant Network Technology Pvt Ltd, in association with X10 Financial Services Ltd was operating various loan apps like Yo-Yo Cash, Toofan Rupees, Coco Cash etc. Similarly, Su Hui Technology Pvt Ltd operated the loan app in agreement with M/s Nimisha Finance India Pvt Ltd.

Who has how much money...

During the searches, various incriminating documents were recovered and confiscated, officials said. Rs 33.36 crore was found with Ejbuzz Pvt Ltd, Pune, the agency said. 8.21 cr with Razorpay Software Pvt Ltd, Bangalore, 1.28 cr near Cashfree Payments India Pvt Ltd, Bangalore and 1.11 cr near Paytm Payments Services Ltd, New Delhi. A total of Rs 46.67 crore in various bank accounts and virtual accounts were traced and frozen.

The ED is probing various crypto exchanges under money laundering for their alleged involvement in the loan app scam. Crypto exchanges like Coin DCX, Coin switch Kuber, WazirX are under ED investigation.

On September 4, the ED seized Rs 17 crore from various payment gateways linked with the Chinese loan app. In August, the ED seized Rs 64.67 crore belonging to the WazirX crypto currency exchange. In April, Rs 6.2 crore lying in different accounts of fintech companies and their affiliates was seized. In May, the agency seized Rs 76.67 crore lying in various bank accounts and payment gateways in connection with the loan app scam.

Stain on NBFC's arm too

Officials found that these accounts belong to 7 companies, of which three are fintech companies. Mad Elephant Network Technology Pvt Ltd, Barionics Technology Pvt Ltd and Cloud Atlas Future Technology Pvt Ltd are operated by Chinese nationals. The three are controlled by three NBFCs (Non-Banking Financial Company) registered with RBI- X10 Financial Services Pvt Ltd, Trac Fin-Aid Pvt Ltd and Jamnadas Morarji Finance Pvt Ltd.

In August 2021, the agency has also seized 107 crores of Chinese NBFCs for violating the Foreign Exchange Management Act (FEMA). NBFCs were involved in illegal loan app scam. The ED probe also revealed that several NBFCs registered with the RBI deliberately allow these fintech companies to use their names to facilitate digital lending.