CoinDCX account among 92 others under scanner for cyber fraud; Hyderabad ED seizes Rs 8.46 crore

Hyderabad: Sleuths of the Enforcement Directorate attached Rs 8.46 crore across 92 bank accounts, including those of CoinDCX and a few crypto wallets.

The action was part of an ongoing investigation into a large-scale cyber fraud committed through fake e-commerce platforms and fake mobile applications and websites.

The ED initiated an investigation based on multiple FIRs registered by the Kadapa Police under sections 420 of the IPC, 1860, and Sections 66-C and 66-D of the IT Act against unknown cyber fraudsters.

Fraudulent part-time jobs and investment apps

The investigation revealed several other FIRs registered across the country, revealing a broader web of similar scams orchestrated through deceptive part-time job schemes and fraudulent investment applications, including the NBC App, Power Bank App, HPZ Token, RCC App, Making App and several other online platforms.

How do scammers operate

- Contact initiated: The ED investigation revealed that the scammers targeted gullible individuals using WhatsApp and Telegram groups and through bulk SMS campaigns.

- Promises of profits: The persons were lured with promises of high commissions and quick profits, persuaded to register on fake apps or links purporting to offer investment or e-commerce-based earnings.

- Simple tasks for rewards: They were instructed to perform simple tasks such as buying or selling items on fictitious e-commerce websites, after which reward points or earnings would appear in their online wallets.

- Payment for chance to work: Before participating in any activity, however, the victims were required to deposit money into their app wallets, typically through UPI payments made to bank accounts or VPA IDs linked to shell entities and shared by the WhatsApp agents.

- Small withdrawals given: To gain the trust of investors, the fraudsters initially credited small profits or commissions into their bank accounts, encouraging them to deposit higher amounts for greater returns. Once substantial sums had been deposited, withdrawal attempts by victims would consistently fail.

- Additional payments asked: When victims contacted the helpline numbers or support agents on WhatsApp or Telegram, they were falsely informed that additional payments were required for taxes or other regulatory clearances.

Even after making such payments, withdrawals remained unsuccessful.

- Contact terminated: Eventually, the apps crashed, websites became inaccessible, user accounts were deactivated and customer support vanished. Victims were also urged to recruit new members with the promise of higher commissions, further expanding the scam network.

How temporary bank accounts are used to store illegal income

Proceeds of Crime to the tune of Rs 285 crore, generated through this scheme, were collected in more than 30 primary-layer bank accounts, used only for short periods ranging from 1 to 15 days, followed by swift transfer to over 80 other bank accounts to minimise the risk of detection or account freeze by banks and law enforcement agencies.

A significant portion of the crime proceeds was found to be converted into cryptocurrency or distributed through hawala channels within India.

The role of crypto

Money trail analysis revealed that the scammers frequently purchased USDT (Tether) through peer-to-peer (P2P) transactions on Binance using third-party payments sourced from crime proceeds.

They exploited price differentials between crypto exchanges, and an investigation revealed that sellers on WazirX, Buyhatke and CoinDCX bought USDT at lower rates and sold it to scamsters at marginally higher prices on Binance P2P, accepting third-party transfers from the crime proceeds.

The investigation also revealed that the scammers converted USDT worth Rs 4.81 crore through CoinDCX using non-KYC-compliant user accounts and unverified third-party payments.

Further investigation is in progress.