The Enforcement Directorate on Thursday said it has frozen bank deposits worth Rs 21.14 crore of an “illegal” online forex trading company and its related entities, that allegedly also dealt in cryptocurrencies, under the foreign exchange violation law.
The action has been taken against the Indian arm of the company identified as OctaFX after the agency carried out searches against it under the provisions of the Foreign Exchange Management Act (FEMA).
The company hosts an app called OctaFx Trading and a website named http://www.octafx.com.
Probe found, the agency said in a statement, that this “online trading app and website were operating in India in association with India base entity OctaFx India Pvt. Ltd”.
“This forex trading platform is widely promoted on social networking sites and are also following referral-based incentive models for acquiring users to their platforms,” the ED said.
The agency found that funds were being collected from users, majorly through UPI/local bank transfers, and were channelised through “dummy” entities.
“These funds are credited in the bank accounts of various dummy entities and domestically transferred to other banks for the purpose of layering and later on cross border transactions have been undertaken,” it alleged.
The agency said it found a “nexus” between international online forex trading brokers and their Indian partners and agents in this case.
“The said app (OCTAFX) and its website have not been authorised by RBI to deal in forex trading. The conduct and operations of forex trading (not being conducted on recognised stock exchange) is illegal, and also violates FEMA regulations,” the ED said.
Multiple accounts of different Indian banks were being shown to investors/users on OctaFx trading app or the website for collecting funds in the guise of facilitating forex trading, the agency found.
“The said accumulated funds, after defrauding these investors/users, were simultaneously transferred to multiple e-wallet accounts such as Neteller, Skrill or to bank accounts of dummy entities.” “It was found that a major portion of the defrauded amount on this trading app was used to purchase crypto currencies/assets through Zanmai Labs Pvt. Ltd. and Zanmai labs is providing banking channels and a bridge to deposit the INR to Wazirx wallets which ultimately were being transferred to Binance exchange (a crypto exchange based in Cayman Islands) leading to transfer the Indian currency to overseas entities in the form of crypto currencies,” the agency said.