The Enforcement Directorate (ED) is investigating a number of online gambling fraud cases, including those against companies controlled by Chinese organizations using fictitious Indian administrators and involving nearly 4,000 crores of transactions. The bureau is examining the financial trails of 1,815 suspect accounts in the case involving Chinese companies. It claims that two companies, Linkyun Technology Private Limited and Dokypay Technology Private Limited, defrauded consumers out of $1,146 crore.
The ED claims that parent companies in China provided initial funding for these companies in the form of foreign direct investment (FDI). According to allegations, the Indian companies served as payment collectors for a number of mobile apps that were removed from the Google Play Store for inappropriate behavior. A representative of the agency said that “the download links of these prohibited programs can be exchanged on any online chat network”.
The agency says that throughout its investigation, it found that the scammers were using a variety of payment channels to conduct international “hawala” transactions and obtain local revenue. Using various fictitious companies and “fake” airline bills purporting to demonstrate the import of cloud CCTV storage rental services, ED discovered after following a trail of 263 crore that 106 crore and 100 crore respectively were sent to Singapore and Hong Kong. Through a cryptocurrency exchange, nearly 57 crore was transferred.
Five domestic companies that had opened accounts with a Mumbai branch of a public sector bank were also targeted by the agency. Subsequent investigations led to the discovery of another 49 private bank accounts and an international move of around Rs. 723 crores. Another account with the Gurugram branch of a Korean bank was used to send 42 crore.
Based on the findings of the investigation, the ED has already made several arrests, including those of Deepak Nayyar, Yan Hao, Naisar Shailesh Kothari, an Indian director, and crypto trader Naisar Shailesh Kothari. After Mr Nayyar was arrested in May, the agency claimed the money was transferred to Hong Kong through a few branches of State Bank of India and State Bank of Mauritius in Mumbai. An earlier arrest in the case – in which assets totaling 45 crores have been seized so far – involved Chartered Accountant Ravi Kumar.
In a separate investigation into Coda Payments India Private Limited (CPIPL) and the mobile app “Garena Free Fire”, the ED froze assets worth Rs 68.53 crore. The accused made unauthorized payment deductions from the sales of digital tokens to players, which are used to enhance their gaming experience. According to CBI, CPIPL collected around 2,850 crore and sent 2,265 crore to foreign. In an effort to monetize and generate revenue for online or game producers, the company has coordinated payment collections from end users of games such as “Garena Free Fire, Teen Patti Gold and Call of Duty, etc.” .
The payment system used by the creators of the game “intentionally” sends alerts after the initial transaction requesting permission to make further purchases without authentication. ED claims that a significant number of users, the majority of whom were young people, would click on the message without realizing that it was allowing all future purchases without additional identification.
From its base in Singapore, Garena publishes ‘Free Fire’. An agent for Coda Payments Singapore Pte, Coda Payments India was allegedly the sole purpose of its incorporation, limited to receiving payments and sending them to the parent company. The agency blocked or confiscated assets worth over 51 crores, including Bitcoins, in a separate investigation involving gaming software E-nuggets. It is claimed that the money obtained from the victims was transferred to more than 300 accounts.