Investigation into Money Laundering Scheme
An extensive investigation by India’s Enforcement Directorate (ED) has exposed a sophisticated global money laundering scheme tied to the trading platform OctaFX. According to findings, OctaFX has reportedly amassed around ₹800 crore (approximately $90 million) in ill-gotten gains within a span of nine months from its Indian activities.
OctaFX Operations and Scrutiny
OctaFX, which is based in Cyprus and run by Russian promoters, operates on a vast scale with technical support from Georgia, administration from Dubai, and server installations in Barcelona. The platform now faces scrutiny as part of an ongoing ED inquiry focused on operations that transform proceeds from illegal activities into cryptocurrencies.
The investigation revealed that OctaFX, engaged in forex trading, commodities, and cryptocurrencies, employed international payment systems alongside cryptocurrency channels to launder funds derived from fraudulent investment schemes targeting the Indian populace. In a bid to perpetuate these illicit activities, some transactions were obscured by falsely claiming to import services from Singapore, effectively masking the initial sources of the funds.
Asset Immobilization and Other Platforms Under Scrutiny
As part of its ongoing efforts, the ED has immobilized assets worth approximately $19 million, which includes luxury items such as a yacht, a villa in Spain, around $4 million located in various bank accounts, and 39,000 USDT in cryptocurrency. Additionally, they outlined investments in land and stock market shares valued at about $9 million.
OctaFX is not operating in isolation; other platforms such as Power Bank, Angel One, TM Traders, Vivan Li, and Zara FX are also under the ED’s scrutiny for similar illegal activities. These investigative actions began following a series of First Information Reports (FIRs) lodged by police departments across numerous Indian cities.
Fraudulent Operations and Financial Losses
The ED reported that fraudulent operations are intertwined with companies like Birfa IT, which acted as brokers facilitating substantial transfers of money into and out of cryptocurrency to assist clients in sending funds to China for undervalued import arrangements. In the case of Birfa, remittances amounting to $540 million were directed to entities in Hong Kong and Canada under the guise of leasing server and escrow services backed by fictitious invoices.
Furthermore, a report indicated that Indian citizens lost over $2.56 billion due to financial fraud in 2024 alone, representing a staggering 206% jump from $840 million in 2023, along with a notable rise of over 50% in the number of reported cases, which escalated from 2.44 million to 3.64 million.
Cyber Investment Fraud Schemes
Investigations into comparable cyber investment fraud schemes have exposed that the masterminds, operating from locations like Laos, Hong Kong, and Thailand, enlist local agents in India to establish shell companies utilizing forged documents. These entities were involved in issuing fabricated initial public offerings (IPOs) and stock market assets, while also engaging in intimidation tactics through phony arrests against victims.
Funds obtained from these criminal activities were channeled through shell corporations, converted into cryptocurrencies, and sent abroad disguised as payments for non-existent imported services. While many such operations relied on international payment gateways, some funds were laundered through hawala channels, with portions being repatriated to India as legitimate stock market investments.
