The Enforcement Directorate has frozen ₹46.96 crore of funds in bank accounts of the companies involved in running Chinese online betting applications. More than 90 websites, through which the applications were being operated, have been identified.
On Friday, the agency conducted searches on the premises of these companies, their directors and some chartered accountants in Delhi, Gurugram, Mumbai and Pune. The searches resulted in the seizure of 17 hard discs, five laptops and phones.
“A total amount of ₹46.96 crore held in four HSBC Bank accounts have also been frozen,” said an ED official, adding that the illegal apps were being operated through websites that are hosted from outside India.
The ED probe is based on FIRs registered by the Cyber Crime division of the Hyderabad Police against Dokypay Technology Private Limited, Linkyun Technology Private Limited and others.
The police have arrested a Chinese national, Yan Hao, who worked as a manager of the Beijing Tomorrow Power Company. His two alleged Indian associates, Dhiraj Sarkar and Ankit Kapoor, have also been arrested.
According to the ED, with the help of chartered accountants, some Chinese nationals had floated multiple companies in India, using local dummy directors. They later entered the country and took over the directorship of these firms.
“Some locals were hired and used to open accounts with HSBC Bank and open trade accounts with online wallets, namely Paytm, Cashfree and Razorpay. These online wallets had lax due diligence mechanisms and their non-reporting of suspicious transactions to the regulatory authorities helped the accused companies launch pan-India operations,” said the ED.
After the bank accounts were opened, the Internet access credentials were couriered by the Indian employees to China. Major payment instructions came from the beneficial owners who operated from there. The accused companies floated a large number of similar looking websites which were hosted through Cloudfare, United States, said the agency.
People were lured into becoming members and placings bets on these apps, which promised attractive rewards on simple games of chance. Agents were also hired to attract new members.
“These agents created closed Telegram and WhatsApp-based groups and attracted lakhs of gullible Indians. Referral codes were used to privately invite new members. This also helped the sponsoring member to earn commission. Paytm and Cashfree were used to collect money and pay commission to all these agent members,” said the agency.
The ED alleged that hundreds of websites were created to promote online betting under the garb of e-commerce. “All websites were not activated daily. Some were activated for placing bets and the information on daily active websites was shared to members using Telegram groups.
The agency has identified multiple bank accounts, mostly held with HSBC Bank. Analysis of two accounts of Dokypay Technology Private Limited revealed that in the last year, ₹1,268 crore was collected. Of the total amount, ₹300 crore came via Paytm and about ₹600 crore was transferred out via the same gateway.
“Analysis of Linkyun Technology’s accounts revealed a similar pattern. Outward foreign remittances to the extent of ₹120 crore were made from them. Large unexplained financial transactions by other Indian companies, which ran online Chinese dating apps, have also been detected,” said the official.
The ED, which is gathering more information from the banks and online payment gateways, suspects that the modus operandi was also used for “hawala” transactions.