ED attaches crypto assets worth Rs 2,385 crore in OctaFX Ponzi scam; mastermind arrested in Spain

New Delhi: Cryptocurrency worth Rs 2,385 crore has been attached under the anti-money laundering law and the Spanish "mastermind" of the alleged multi-crore OctaFX Ponzi scam has been arrested in that country, the Enforcement Directorate (ED) said on Friday.

The case pertains to a "fraud" where several investors are alleged to have been duped on the false promise of high returns through the OctaFX forex trading platform.

A provisional order has been issued under the Prevention of Money Laundering Act (PMLA) to attach cryptocurrencies worth Rs 2,385 crore in connection with the ongoing investigation against the "unauthorised" forex trading platform OctaFX.

The alleged mastermind of the fraud -- Pavel Prozorov -- has been arrested from Spain by the local police authorities, based on his involvement in cybercrimes affecting multiple countries, the agency said in a statement.

OctaFX, as per the ED, "systematically duped" Indian investors of Rs 1,875 crore between July 2022-April 2023, generating profits of around Rs 800 crore, through a multi-country operation.

The company operated from 2019-2024 and the total profits from India are estimated to exceed Rs 5,000 crore, much of which has been "illicitly" transferred overseas, it said.

"OctaFX presented itself as an online forex trading platform for currency, commodities and crypto trading without RBI permission.

"The initial investors received small profits to build trust, as is generally seen in a typical Ponzi scheme," it said.

The ED probe found that OctaFX operated through a "distributed global network" designed to "evade" regulatory scrutiny and it "layered" illicit funds across jurisdictions.

The marketing activities were handled by entities in the British Virgin Islands (BVI), some entities and persons based in Spain hosted servers and back-office operations, entities in Estonia managed payment gateways, those in Georgia provided technical support and an entity located in Cyprus served as the "holding" company for the Indian entity.

Some entities based in Dubai "oversaw" Indian operations via Russian promoters and persons in Singapore facilitated the export of bogus services to launder funds abroad, as per the ED.

OctaFX collected investor funds via the UPI payment mode and local bank transfers, which were routed through dummy Indian entities and individuals' accounts and layered across multiple mule accounts.

The ED said these laundered funds were ultimately transferred abroad under the guise of "fake" imports of software and R&D services to entities controlled by Prozorov in Spain, Estonia, Russia, Hong Kong, Singapore, UAE and the UK. A portion of the laundered funds were later reintroduced into India as FDI (foreign direct investment), it said.

A total of Rs 2,681 crore worth assets, including 19 immovable properties and a luxury yacht in Spain owned by Prozorov, have been attached by the ED in this case till now.

It has filed two chargesheets before a special PMLA court against a total of 55 entities.