Chinese companies used to cheat millions of dollars through fake loan application; Know what the whole game was, how ED broke it

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In the Chinese Loan Apps money laundering and fake loan app case, the ED has achieved great success while tightening the grip on Chinese companies and the Indian companies that support them. What was this whole thing and what were the aspects of it, this report investigating all these things.

Stepping up its crackdown on cryptocurrencies that have direct links to Chinese lending apps harming Indian citizens, the Law Enforcement Directorate conducted searches in 9 different cities and 16 locations, including Mumbai. These include payment gateways of various bank-related entities involved in illegal loan application scams. During the raids, the agency seized Rs 46.67 crore deposited in various virtual accounts.

According to the Law Enforcement Directorate, the agency initiated a money laundering investigation based on an FIR registered by the Cybercrime Police Station, Kohima, Nagaland under various sections of the CPI. The ED in its statement said that searches were carried out as part of the investigation at 16 premises of banks/branches/payment gateway offices in Delhi, Ghaziabad, Mumbai, Lucknow, Gaya, Gurgaon, Mumbai , Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore. Went. The investigation involves app-based tokens called HPZ and related entities.

How was the whole game?

According to the agency, the HPZ token was an app-based token that promised users substantial returns by investing in mining bitcoins and other cryptocurrencies. Fraudsters were the first to trick victims into doubling their investment through the HPZ Token app to invest in the business. Money was taken from users through payment gateways, node accounts, and individuals other than UPI. Part of the amount was refunded to the investors and the balance was transferred through various payment gateways/banks to the accounts of different people and companies, from where part was withdrawn in digital/virtual currencies.

This is how the money was raised

After that, the scammers stopped the payment and the website was blocked, the ED said. During the investigation, the agency discovered 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 had links with several other Chinese companies. businesses. Several other companies have also been involved in extorting money from the public under the guise of operating various lending apps, websites and gambling apps, officials said.

Indian companies were also involved

As soon as the agency launched a thorough investigation to uncover 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, operated various lending applications such as Yo-Yo Cash, Toofan Rupees, Coco Cash, etc. Similarly, Su Hui Technology Pvt Ltd operated the lending 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 investigating various money laundering crypto exchanges for their alleged involvement in the lending app scam. Crypto exchanges like Coin DCX, Coin switch Kuber, WazirX are under ED investigation.

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

Stain on NBFC’s arm too

Officials discovered that these accounts belong to 7 companies, three of which 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. All three are controlled by three NBFCs (non-bank 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 also seized 107 crore of Chinese NBFC for violating the Foreign Exchange Management Act (FEMA). NBFC was involved in an illegal loan application scam. The ED probe also revealed that several RBI-registered NBFCs deliberately allow these fintech companies to use their names to facilitate digital lending.

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