An Indian cryptocurrency trader from Gujarat named Naisar Kothari has been arrested by the ED (Enforcement Directorate) on charges of buying USDT (Tether) coins illegally on behalf of a Chinese company that is directly connected to an online betting scam case that is to be more than 1100 crores. The arrest was made after the accused was found transferring the Tether crypto coins to unknown wallets through forex (foreign exchange).
According to the ED,
Meanwhile, the Indian Court has orders Kothari to be placed in custody until December 22, on charges of violating the Prevention of Money Laundering Act of the nation.
The case came into light when the ED conducted raids on multiple companies that they thought might have been running illegal online betting applications. The directors and CAs of these companies were found to have been strongly associated in illicitly running online betting applications on websites hosted outside India, which as per the ED, are operated by Chinese nationals. As per reports, Indian investors have lost more than $500 Mn in crypto scams between 2017 and 2019.
In this case, the FIR was filed by a person at the Telangana Police station, where he had complained about an online betting app where he had invested and lost. Following this complaint, the ED arrested three people amongst one is Chinese national, and filed a case against two companies, namely Dokypay Technology Private Limited and Linkyun Technology Private Limited.
After conducting several raids of the case, the ED also found out that some locals of Gujarat’s Bhavnagar district from where Kothari was arrested were hired to execute the money-laundering plan. They were allured to open accounts in the HSBC bank and link various online wallets like Cashfree, Paytm, etc., with their trading accounts.
According to the ED, the “lax due diligence mechanisms” on these online wallets prevented these wallets from reporting any malicious transactions, which gave the accused companies enormous scope to launch these scamming operations in India.