Cyber Crime
ED Nabs Two Masterminds in Rs 33 Lakh ‘Digital Arrest’ Scam
The Directorate of Enforcement (ED), Chennai, has arrested two key suspects involved in a sophisticated “digital arrest” scam that defrauded a senior citizen of Rs 33 lakh. One suspect was apprehended in Kolkata, while the other was caught in Delhi as he attempted to flee the country. Both suspects were instrumental in managing mule accounts, converting illicit funds into cryptocurrency, and transferring them overseas.
The case originated from an FIR filed by the victim with the Chennai Police. She alleged that scammers threatened her with false accusations and the threat of a “digital arrest,” coercing her into parting with her savings. The ED’s investigation uncovered a network of mule bank accounts used to launder fraudulent funds, revealing a highly organized operation.
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As part of its probe, the ED conducted extensive searches across more than 30 locations in West Bengal, Madhya Pradesh, Uttar Pradesh, Gujarat, and Maharashtra. During the raids, officials seized mobile phones, laptops, and other electronic devices containing incriminating evidence. Additionally, cryptocurrency in the form of Bitcoin (BTC) and Tether (USDT) was found and confiscated.
The central agency’s investigation highlighted a complex system where cash withdrawn from mule accounts was converted into cryptocurrency. The funds were then transferred to entities suspected to be based abroad. The scamsters also misused cash deposit machines (CDMs) to deposit funds into fintech company accounts, which were subsequently routed to individual accounts for cryptocurrency purchases. This cryptocurrency was allegedly used to obscure and transfer the proceeds of crime (POC) with the help of foreign-based accomplices.
The ED also uncovered significant lapses by several fintech companies that failed to adhere to Know Your Customer (KYC) norms. These companies allegedly accepted cash deposits from bogus entities and individuals, enabling the laundering of tainted money from digital crimes. The cash deposits, suspected to total hundreds of crores, are now under scrutiny. The agency is investigating the role of these fintech companies, along with their distributors, retailers, and associated bank accounts, as part of the larger probe.
The ED continues its efforts to trace and dismantle the network behind this scam.
