The Directorate of Enforcement (ED) of India has seized a major crypto money laundering case connected to a gaming app, uncovering a scam that involved frozen crypto assets worth ₹90 crore ($10 million). The assets were held in 70 accounts linked to popular crypto wallets Binance, ZebPay, and WazirX. The app, known as “E-Nugget,” lured gamers with promises of high returns on their investments but ultimately failed to deliver on its promises, leading to a sudden halt in operations and preventing users from withdrawing their funds. The investigation into the case began in 2022 after the ED discovered that part of the money obtained from the scam was invested in digital assets, with around 2,500 fake bank accounts identified and analyzed, resulting in the seizure of ₹19 crore ($2.27 million).
In November 2022, the ED requested Binance to freeze 150.22 Bitcoins, valued at $2.5 million, linked to E-Nugget, bringing the total value of seized assets in the case to $8.4 million. The authorities also arrested five individuals in September from Kolkata who were connected to the gaming app, with the mastermind behind the scam, Amir Khan, currently in Judicial Custody. Khan was reportedly hiding outside India at the time of his arrest, and the Kolkata police carried out raids that resulted in the seizure of multiple SIM boxes containing more than 2000 SIM cards, around 3,000 ATM cum debit cards, and laptops from an office in the city. The swift action taken by the authorities highlights the growing concern over crypto-related scams in India.
The ED’s investigation into the gaming app scam reveals a sophisticated operation that deceived users with false promises of significant investment returns, ultimately leading to the loss of millions of dollars in frozen crypto assets. The involvement of major crypto wallets such as Binance, ZebPay, and WazirX in holding the seized assets underscores the challenges faced by regulators in monitoring and preventing illicit activities in the crypto space. The use of fake bank accounts and complex financial transactions further complicates efforts to crack down on money laundering and fraud schemes involving digital assets.
India, known for its rapidly growing retail crypto adoption, has seen an increase in reported cases of crypto-related scams and fraud in recent years. The government’s crackdown on illegal activities in the crypto sector, including the seizure of frozen assets and arrests of individuals involved in fraudulent schemes, demonstrates a commitment to maintaining regulatory oversight and protecting investors from potential risks. The ED’s ongoing efforts to investigate and prosecute those responsible for the E-Nugget gaming app scam send a clear message that perpetrators of financial crimes involving cryptocurrencies will face consequences for their actions.
The case involving the E-Nugget gaming app highlights the importance of vigilance and due diligence when engaging with new and unfamiliar platforms offering investment opportunities. Users are cautioned to research and verify the legitimacy of any app or service before committing funds, especially in the rapidly evolving and sometimes volatile world of cryptocurrencies. The ED’s proactive approach in investigating and dismantling fraudulent schemes serves as a reminder of the risks inherent in the crypto market and the need for greater awareness and education to protect consumers from falling victim to scams and fraudulent activities. By holding individuals and entities accountable for their involvement in illegal activities, regulators can help maintain the integrity and trustworthiness of the crypto ecosystem in India and beyond.
