ED Arrests Four Accused In INR 400 Cr Gaming App Fraud

The Enforcement Directorate (ED) has arrested four persons for their alleged involvement in a scam carried out via online gaming application ‘Fiewin’ to defraud users to the tune of over INR 400 Cr (around $47.6 Mn).

In a statement, crypto exchange Binance said its financial intelligence unit helped ED trace the funds and unearth the cross-border criminal network.

The ‘Fiewin’ app masqueraded as a legitimate platform and allegedly lured gullible users into online betting and gaming with the promise of easy money. Users were first instructed to make small investments in the app to earn commissions by playing mini-games.

The app, purportedly run by Chinese nationals, then gained the trust of gamers by offering bulk payout services and allegedly lured them into making larger bets. However, several users complained that the platform abruptly halted withdrawals on the platform, leaving them to recover the trapped funds.

The ill-gotten money was converted into cryptocurrency and then laundered to wallets of Chinese nationals on foreign crypto exchange Binance. An investigation by ED revealed that the criminal network used several methods to obfuscate the trail of funds, including opening crypto wallets and ‘mule’ bank accounts.

The arrests are part of ongoing efforts of the enforcement directorate to crack down on online gaming apps that are allegedly involved in money laundering. The ongoing sweep has also involved apps offering digital loans and making false promises of getting high returns in lieu of investment in cryptocurrencies. 

Earlier this month, ED unearthed a money laundering operation being carried out by illegal betting and online gaming apps via kirana stores. As per media reports, over two dozen offshore gaming apps have come under the scanner of ED for remitting and round-tripping funds, resulting in user losses to the tune of INR 1 Lakh Cr.

In May, the ED seized frozen crypto assets worth INR 90 Cr, kept in wallets of Binance, ZebPay and WazirX, in connection with a money laundering case involving online gaming app E-Nugget. The agency alleged that E-Nugget disguised itself as a gaming platform and lured users with promises of lucrative profits.

Last year, the ED also made several arrests as part of its investigation against several fintechs, NBFCs and payment aggregators, purportedly owned and controlled by Chinese nationals, that offered short-term instant loans and later harassed borrowers by accessing their personal data.