India’s ED uncovers web of fake crypto sites in money laundering probe

India’s financial crime watchdog is widening its crackdown on crypto-related fraud. In the fresh move, ED carried out coordinated searches across three states. These raids were linked to a case involving fake investment platforms that allegedly duped investors in India and overseas.

The Enforcement Directorate reportedly raided 21 residential and office locations across Karnataka, Maharashtra and New Delhi. This was part of a money laundering investigation. The searches were conducted under the Prevention of Money Laundering Act (PMLA). The case was registered against 4th Bloc Consultants and several other individuals. 

ED finds web of crypto wallets

According to the ED, the probe comes out of an FIR and intelligence inputs shared by the Karnataka state police. The authorities have described it as an organised and multi-year financial fraud operation. The accused allegedly ran a network of fake crypto investment platforms that closely looked like actual trading websites. 

The platforms under investigation used to promise unusually high returns. However, they targeted both Indian residents and foreign nationals. The scammers lure them with claims of quick and regular profits through digital assets. Investigators highlighted that the operators used photographs of well-known personalities and so-called crypto experts without permission to build credibility. 

The report added that several early investors were paid small returns to establish trust before larger sums were asked for. These tactics mirror classic multi-level marketing and pig-butchering scams. 

The ED said the group relied heavily on social media platforms to promote the schemes. This includes Facebook, Instagram, WhatsApp and Telegram. However, referral bonuses were offered to expand the investor base. This takes a dark turn as funds were allegedly routed through a web of crypto wallets, shell companies and foreign bank accounts.

Crypto scams traced back to 2015

Officials have marked that the proceeds of crime were moved using peer-to-peer (P2P) crypto transfers. The scammers also used hawala channels before converting them into cash or parking them in bank accounts. It added that some funds were also used directly for crypto transactions.

Authorities also traced movable and immovable assets in India and abroad. These assets were allegedly acquired using the funds gathered from fraud. The ED had stated that the syndicate had been operating since at least 2015. No arrests have been announced so far.

In a public advisory, the agency issued a warning for investors against engaging with several websites suspected to be part of the scam network. This includes goldbooker.com, cryptobrite.com, hawkchain.com, cubigains.com, bitminerclub.com and others. It has urged immediate cessation of any related activity. Meanwhile, digital assets are not legal tender in the country.

The global crypto is dealing with high selling pressure. The cumulative crypto market cap remained under the $3 trillion mark as Bitcoin price looked stuck below $88,000. BTC is running down by 7% on a year-to-date (YTD) basis.

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