An investigation against an online gaming app has led the Enforcement Directorate (ED) to a Rs 400-crore fraud involving Chinese nationals. The ED has now frozen the accounts of some Chinese nationals linked to the online gaming app, Fiewin. A sum of about Rs 25 crore has been frozen. Earlier, four Indians who allegedly supported the Chinese nationals in the fraud were arrested by officials of ED in Kolkata. The ED was supported by Binance, which operates the world's largest cryptocurrency exchange, in its probe.
How Fiewin Fraud Worked
The Fiewin app gained traction by promising users the opportunity to earn money easily by playing mini-games, according to a Binance statement. "New users could quickly create an account and begin participating in the app's activities, with the option to 'top up' their in-app balance via various payment methods. However, reports have surfaced suggesting that once users' accounts accumulated substantial funds, the app stopped allowing them to withdraw the funds, leaving them unable to recover their money," it added.
The ED's probe found that a sum of about Rs 400 crore was stolen through this scheme. "This money was transferred into various cryptocurrency addresses, which were later traced back to the operation," Binance said.
As more and more people got duped by this online gaming app, local police started receiving complaints. The number of such complaints grew, and the case was transferred to the ED, specialised in economic crimes and money laundering cases. The ED's investigation found Chinese nationals were operating this fraud with the help of some connections in India.
The probe found that the money collected from games would be deposited in the accounts of some people called "recharge persons". These people allowed their accounts to be used in exchange for some commission from the app owners. This sum was then converted to cryptocurrency and transferred to crypto accounts of Chinese nationals, ED has found.
"Through its investigation, the ED discovered that the app had been part of a cross-border criminal network it used various methods to obfuscate the origin and movement of illicit funds by utilizing bank accounts of 'mules' and cryptocurrency wallets, creating a complex web of transactions to hinder detection and tracing," Binance said.
The Accused
The ED investigation found that Arun Sahu and Alok Sahu from Odisha's Rourkela were "recharge persons". The money collected from online gamers would come to their accounts. This money would then be converted to cryptocurrency and deposited into the online wallets of Chinese nationals, the ED has found.
Another arrested accused, Patna engineer Chetan Prakash, allegedly played a key role in converting money in recharge persons' accounts to cryptocurrency.
Joseph Stalin, a software engineer from Chennai has also been arrested in this connection. Stalin allegedly helped Pie Pengyun, a Chinese national based in Gansu province, become a co-director in a company he owned. ED has found that Pengyun used the account of Stalin's company Studio 21 for bulk payout services related to the app. This helped them gain the confidence of online gamers in the beginning and prompted them to place larger bets.
"The investigation has led to the arrest of several individuals who played key roles in facilitating the fraud, working in tandem with handlers linked to Fiewin's gaming apps. The criminals communicated via privacy-focused messaging applications and operated from various locations," Binance has said.
A Massive Fraud
The investigation so far has found that a sum of nearly Rs 400 crore has been laundered using the Fiewin app. This amount was deposited in the form of cryptocurrency in eight Binance wallets belonging to Chinese nationals. These nationals, ED has found, communicated with the Indian accused -- Arun Sahu, Alok Sahu, Chetan Prakash and Joseph Stalin -- through the Telegram platform.
With the case still ongoing, both the ED and Binance continue to work closely to further untangle the criminal network behind the fraud scheme. Their combined efforts aim to expose the full extent of the Fiewin app's fraudulent activities and identify everyone involved," Binance has said in its statement.
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