The Enforcement Directorate has made significant progress in dismantling the OctaFX Ponzi scheme, a fraudulent forex trading operation that deceived Indian investors of approximately ₹1,875 crore between July 2022 and April 2023.
In a recent development, the ED has issued a provisional attachment order under the Prevention of Money Laundering Act (PMLA), seizing cryptocurrency assets worth ₹2,385 crore linked to the scam.
The mastermind behind the operation, Pavel Prozorov, was apprehended by Spanish authorities following an international manhunt coordinated with Indian law enforcement.
Prozorov, a Russian national, is accused of orchestrating a complex network of shell companies and digital platforms across multiple countries, including Spain, Cyprus, Estonia, and the British Virgin Islands, to facilitate the illicit activities of OctaFX.
According to the ED’s investigation, OctaFX presented itself as an online forex trading platform offering high returns on investments in currencies, commodities, and cryptocurrencies.
The platform operated without authorization from the Reserve Bank of India (RBI) and employed typical Ponzi scheme tactics, such as paying returns to early investors using the capital of new investors, to build trust and attract more participants.
The funds collected from Indian investors were routed through various channels, including UPI and local bank transfers, and subsequently layered across multiple mule accounts.
These funds were then transferred abroad under the guise of payments for non-existent software and research services, facilitating money laundering activities.
The ED’s actions have led to the attachment of assets totaling over ₹2,681 crore, which includes 19 immovable properties and a luxury yacht in Spain owned by Prozorov. The agency has filed charges against 55 entities involved in the operation, and further investigations are ongoing.
This case underscores the growing concerns over unauthorized digital financial platforms and the need for stringent regulatory oversight to protect investors from such fraudulent schemes. The ED’s swift action highlights India’s commitment to combating financial crimes and ensuring accountability in the digital financial sector.