In one of Karnataka’s largest crackdowns on cybercrime to date, the state’s Crime Investigation Department (CID) has dismantled a sprawling online fraud network that operated through tens of thousands of illegal “mule” bank accounts, officials said on Friday.
The operation, carried out by the Karnataka CID Cyber Crime Wing, involved coordinated raids at more than 100 locations across the state on February 6. The action led to the arrest of 13 key accused, identified by investigators as the central coordinators of a highly organised financial fraud ecosystem.
According to officials, the network had created and managed over 40,000 mule accounts, which were systematically used to route money stolen from victims of cyber frauds, including phishing scams, fake investment schemes, online payment fraud and identity theft.
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How the network operated
Mule accounts are bank accounts opened in the names of unsuspecting or complicit individuals but controlled by criminal operators to move illicit funds while masking the identities of the end beneficiaries. Investigators said the arrested accused recruited account holders by offering small cash payments in exchange for ATM cards, passbooks and full access to banking credentials.
These accounts were then pooled and handed over to organised cybercrime syndicates, which used them as temporary conduits to receive defrauded money. Funds were quickly withdrawn through ATMs or layered through multiple transfers to evade detection by banks and law enforcement agencies.
During interrogation, officials found that a significant number of account holders were unaware that their bank details were being used for criminal activities. The syndicate allegedly targeted students, daily-wage workers and unemployed youth, exploiting financial vulnerability by promising “easy money” for minimal effort.
Trail of rising cybercrime complaints
The investigation was launched after authorities noticed a sharp spike in cybercrime complaints across Karnataka, particularly cases involving rapid fund transfers through multiple accounts. Analysts tracking transaction patterns flagged repeated use of similar accounts, which eventually led investigators to the mule account operators.
Officials said forensic analysis of bank trails, call data records and seized electronic devices revealed the scale and coordination behind the operation. “Breaking the mule account chain is critical to choking the flow of stolen money,” a senior officer involved in the probe said, adding that cyber fraud networks rely heavily on such accounts to remain operational.
Accounts frozen, probe widens
So far, more than 42,000 suspicious bank accounts linked to the network have been identified. The CID is working with multiple banks to freeze these accounts and prevent further misuse. Authorities are also analysing transaction histories to trace money trails and identify additional beneficiaries, handlers and linked syndicates operating outside the state.
Officials indicated that further arrests are likely as the investigation expands to cover cross-border digital links and potential coordination with cybercriminal groups operating from other parts of the country.
Public warning issued
The CID has issued a strong advisory urging citizens not to share bank documents, ATM cards, PINs or online banking credentials with anyone, regardless of assurances or promised commissions. Officials warned that even temporarily lending a bank account can attract serious criminal liability under financial and cybercrime laws.
“Allowing your account to be used, even for a small payment, can make you an active participant in organised crime,” officials cautioned, noting that many mule account holders face prosecution once misuse is established.
A major enforcement milestone
With cybercrime incidents rising steadily each year, investigators described the operation as a significant step towards cleaning up Karnataka’s digital financial ecosystem. Experts say dismantling mule account networks is one of the most effective ways to disrupt online fraud, as it directly targets the infrastructure that enables criminals to move stolen funds.
Authorities said efforts are continuing to recover defrauded money and identify victims linked to the frozen accounts. The CID is also expected to intensify coordination with banks and digital payment platforms to improve early detection of mule account activity.
Further developments are anticipated as the probe progresses, with officials signalling a sustained crackdown on cyber fraud networks operating within and beyond the state.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
