Chennai Regional Office arrested two people in connection with the “Digital Arrest” scam

Chennai: Two individuals were detained by the Chennai zonal office of the Directorate of Enforcement (ED) in relation to a “digital arrest” scheme, in which the accused reportedly exploited mule accounts to swindle others, converted illegal cash into cryptocurrencies, and sent it abroad.

After a senior gentleman complained to Chennai Police that the two con artists had cheated him of Rs 33 lakh, the ED began looking into the alleged scam.

“Both suspects played a key role in managing mule accounts, converting illicit cash into cryptocurrency, and transferring it overseas,” according to an ED statement.

The statement claims that one of the defendants was captured in Delhi, and the other in Kolkata.

According to ED, the defendants also allegedly abused cash deposit machines (CDMs) to transfer funds into the accounts of fintech businesses.

“The accused was able to acquire cryptocurrencies once this money was transferred to individual accounts. With the help of accomplices using foreign phone lines, this cryptocurrency was reportedly utilized to hide and move the proceeds of crime (POC) overseas,” the statement said.

A network of multilayer mule bank accounts used to transfer stolen payments was discovered during an ED investigation.

As a result, as part of the probe, the agency also searched more than 20 places in other states, including West Bengal, Madhya Pradesh, Uttar Pradesh, Gujarat, and Maharashtra.

Numerous cell phones, computers, and other electronic devices with significant damning material were found during the searches. Additionally, cryptocurrency in the form of USDT and BTC was discovered and confiscated,” the directorate said in a statement.

The accused allegedly had a “sophisticated system” of taking money out of “mule accounts,” turning it into cryptocurrencies, and sending it overseas, according to the agency.

“A complex system was discovered by the ED, whereby money taken out of mule accounts was exchanged for cryptocurrencies and sent to organizations thought to be situated overseas. This approach was used to transfer large sums of money that came from several digital fraud operations,” the ED statement said.

According to the government, they are investigating the involvement of fintech businesses that have violated Know Your Customer (KYC) regulations and have discovered “major lapses” by a number of them.

“A number of fintech businesses took cash deposits from fraudulent organizations and people in violation of Know Your Customer (KYC) regulations. These financial payments, which total hundreds of crores, are thought to be corrupt funds that came from online crimes. The statement added, “We are looking into the involvement of these fintech businesses, their distributors, retailers, and related bank accounts.