Chinese behind most crypto, loan app rip-offs: ED report

NEW DELHI: As the magnitude of cybercrime and the number of its victims continue to rise and has warranted Supreme Court's intervention, a report prepared by Enforcement Directorate shows that while domestic players have been primarily engaged in digital arrest and other such frauds, Chinese nationals have almost acquired dominance over loan app- and cryptocurrency-related rip-offs.

The agency has already initiated a probe in many of these cases involving Chinese fraudsters, and an estimated Rs 28,000 crore in crime proceeds has been identified.

The involvement of Chinese nationals and their control over illegal loan apps came to light after ED started probing LoanPro, FastCredit, SmartRupee and other similar loan apps over the past few years. The money trail in these cases showed that thousands of people were tricked across more than 20 states in the country. Many were bullied and blackmailed when they failed to meet the stringent repayment conditions, even leading to suicides.

While these illegal "instant loan" apps charged hefty platform fees in the range of 30-40% of total loan amount, deducted at the time of disbursement, the term of the credit extended from 7 to 15 days.

While Chinese nationals were found to be controlling these syndicates from abroad, their Indian associates ran the operations in the country from behind a veil of NBFCs and fintech and shell entities for laundering the crime proceeds. Indian and foreign payment gateways were also found involved in facilitating these transactions - some of them have already been questioned by the central agency.

In many cases, the crime proceeds were converted into cryptocurrencies and siphoned off to China. In other cases, the perpetrators routed the booty as payments for fake imports from Hong Kong and other Chinese territories.

According to the probe agency, these apps used a consortium of Chinese seed capital, NBFCs, fintech companies and payment aggregators. Shinebay Technologies, for instance, operated loan apps (LoanPro, FastCredit, SmartRupee, etc) that lent money at exorbitant interest rates for 7-15 days terms. Borrowers paid 30-40% of the loan amount at time of disbursement as platform fees. Private phone data of borrowers were hacked and used for blackmail in case of default, leading to several cases of suicide.

In the case of HPZ Token, a cryptocurrency mining scheme, at least 10 Chinese nationals were found to have collected over Rs 2,200 crore from people across 20 states, and the alleged 'proceeds of crime' were sent out using payment gateways. As much as Rs 500 crore of this was frozen by ED with payment gateways after the scam was unearthed.

In a case where investors were offered very high returns on investments using an online app 'LOXAM', the probe agency in July this year arrested a money changer who was found to have assisted a Chinese national in remittance of more than Rs 900 crore of "proceeds of crime" out of the country in a matter of just seven months.

The arrested accused, Rohit Vij, converted Rs 903 crore into foreign currencies through his Ranjan Money Corp and KDS Forex, and helped Chinese national take the money out of the country.


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