Enforcement Directorate finds money trail to China

The cases include those against the companies run by some China-based entities through dummy Indian directors

Updated - November 07, 2022 09:25 am IST

Published - November 04, 2022 06:03 am IST - NEW DELHI

The Enforcement Directorate alleges that two companies — Linkyun Technology Private Limited and Dokypay Technology Private Limited — were involved in duping the users to the tune of ₹1,146 crore. Photo: Twitter/@dir_ed

The Enforcement Directorate alleges that two companies — Linkyun Technology Private Limited and Dokypay Technology Private Limited — were involved in duping the users to the tune of ₹1,146 crore. Photo: Twitter/@dir_ed

The Enforcement Directorate (ED) is investigating multiple cases of online gaming fraud, including those against the companies run by some China-based entities through dummy Indian directors, involving transactions worth about ₹4,000 crore.

In the case pertaining to Chinese entities, the agency is pursuing the money trails of 1,815 suspect accounts. It alleges that two companies named Linkyun Technology Private Limited and Dokypay Technology Private Limited were involved in duping the users to the tune of ₹1,146 crore.

According to the ED, the initial capital in these firms was brought in the form of Foreign Direct Investment (FDI) from the parent companies in China. The Indian companies acted as payment collectors for multiple mobile applications which were banned from the Google Play Store for malpractices, as alleged. “Download links of such banned apps can be shared through any online messaging platform,” said an agency official.

The agency, during its probe, alleges to have found that those behind the scam used various payment gateways for receiving domestic revenues and for carrying out international “hawala” transactions. Following a trail involving ₹263 crore, the ED found that ₹106 crore was sent to Singapore and ₹100 crore to Hong Kong using multiple shell companies, on the basis of “bogus” airway bills and fabricated invoices showing import of cloud CCTV storage rental services. About ₹57 crore was routed through a cryptocurrency exchange.

The agency also zeroed in on five domestic entities that had opened accounts with a public sector bank’s Mumbai branch. Subsequent investigations led to the detection of 49 more accounts with a private bank and overseas transfer of about ₹723 crore. Another account with a Korean bank’s Gurugram branch was used to send ₹42 crore.

Based on the findings, the ED has so far made several arrests, including that of Chinese national Yan Hao, crypto trader Naisar Shailesh Kothari, an Indian director named Dhiraj Sarkar and Deepak Nayyar.

Following Mr. Nayyar’s arrest in May, the agency had alleged that the funds were laundered to Hong Kong through select branches of the State Bank of India and the State Bank of Mauritius in Mumbai. Earlier, a chartered accountant, Ravi Kumar, was also arrested in the case, in which assets worth ₹45 crore have been seized so far.

In another case, the ED has frozen assets worth ₹68.53 crore in a probe against Coda Payments India Private Limited (CPIPL) and “Garena Free Fire” mobile game. Unauthorised payment deductions against the sale of digital tokens, which are used for enhancing gaming experience, to the players were made by the accused.

The agency alleged that the CPIPL had collected about ₹2,850 crore, of which ₹2,265 crore was transferred abroad. The company facilitated payment collections from the end users of games like “Garena Free Fire, Teen Patti Gold and Call of Duty, etc.” for monetising and generating revenue for the web or game publishers.

The game developers had “intentionally” designed the payment mechanism which sent notifications asking for permission to make subsequent payments without any authentication, after the first one. A large number of users, most of who were children, would click on the notification not realising that they were authorising all future payments without any further authentication, the ED has alleged.

Garena, publisher of “Free Fire”, operates from Singapore. The Coda Payments India was allegedly incorporated to only function as an agent of Coda Payments Singapore Pte. Limited for collecting payments and remitting them to the parent entity.

In yet another case involving E-nuggets gaming app, the agency has seized or frozen assets worth over ₹51 crore, including Bitcoins. More than 300 accounts were used to launder the money collected from victims, it is alleged.

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