ED raids in Delhi, Jaipur and Mumbai in Rs 600 crore crypto conversion case

New Delhi: The Enforcement Directorate on Monday said it has frozen bank deposits worth more than Rs 2 crore after conducting multi-state searches against an Indian national accused of illegal conversion of cryptocurrency worth around Rs 600 crore through various Indian crypto exchanges.

The searches were undertaken on February 20 at Delhi, Jaipur in Rajasthan and Mumbai in Maharashtra under the Foreign Exchange Management Act (FEMA).

The case pertains to the "conversion" of cryptocurrency worth around Rs 600 crore at various Indian crypto exchanges and the subsequent transfer of the funds to the beneficiaries, the federal agency said in a statement.

"ED investigation was initiated on the basis of a newspaper report that an Indian national named Chirag Tomar was undergoing prison sentence in the USA for stealing more than USD 20 million from hundreds of victims through the use of fake or spoofed websites mimicking the cryptocurrency exchange website Coinbase," it said.

Tomar, sentenced to prison by a court in the US in November last year, could not be contacted immediately for his response to the allegations made against him by the ED.

Probe found, the agency said, trusted websites were "spoofed" in such a way by search engine optimisation that when the website would be searched, the spoofed website would appear at the top.

The spoofed website appeared "exactly similar" to the trusted website except for the contact details, the investigation found.

When users entered the login credentials, the spoofed website would show it wrong. Therefore, the users would contact the number given on the spoofed website which would eventually connect them to the designated call centre "managed" by Tomar.

Once the "fraudsters" gained access to the victims' accounts, they transferred their cryptocurrency holdings to cryptocurrency wallets under their control. The stolen cryptocurrency would then be sold on the website -- localbitcoins.com -- and converted into Indian Rupee at Indian crypto exchanges, the ED found.

Subsequently, the money was "transferred to the bank accounts of Tomar and his family members." The ED said it has identified that the amount received by Tomar and his family, so far, through this scheme was Rs 15 crore.

Several bank accounts pertaining to the Tomar family have been frozen during the searches including deposits of Rs 2.18 crore kept in them, it said.

A similar "modus" of selling "doubtful" crypto on local bitcoins and its conversion to Indian Rupee on Indian crypto exchanges was unearthed during the search operation, the agency claimed.