The probe by the ED in Kolkata has found that Chinese nationals allegedly operated the illegal betting/gaming application, Fiewin, with the assistance of their Indian accomplices. The ED has arrested four Indian nationals linked to the case, and they are currently in judicial custody.
Fiewin was projected as an app to make fast and easy money and was marketed through YouTube, Facebook, and other digital modes. The app had simple games like Minesweeper and Colour Prediction, based totally on luck without any role of the skills of the player.
“Funds from app users/gamers were funnelled into the bank accounts of Indian “recharge persons” like Arun Sahu and Alok Sahu, who then converted these into cryptocurrency and transferred them to wallets owned by Chinese nationals on Binance. Another accused, Chetan Prakash, helped with this conversion, while Joseph Stalin facilitated the Chinese national Pie Pengyun’s involvement in a local company used for payout services.,” sources said.
The ED probe has revealed that around Rs 400 crore was generated from this scheme and moved to seven Binance wallets linked to Chinese nationals. These accounts were being operated from China, as seen from the access log IP addresses, the source added.
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“… the gains generated through the Fiewin online gaming app were then layered and laundered through various accounts to acquire movable and immovable properties. Further, a substantial portion of the proceeds of crime generated in India was siphoned off by Chinese nationals using the cryptocurrency route. The funds received by the Chinese nationals were layered using multiple private and exchange-based wallets,” the ED said. The ED had identified Chinese nationals Huang Liangliang, Zhang Longlong, and Zheng Wenjun as the ‘beneficiaries’ who allegedly received funds in their Binance wallets from the ‘recharge persons’ of the app after extensive layering using multiple crypto exchanges. A provisional attachment order has been issued attaching properties worth Rs 25,78 crore, including cryptocurrency worth Rs 24.9 crore belonging to the Chinese nationals.
“…. crypto wallets of six other Chinese nationals were used for layering and concealing the proceeds of crime, which were finally parked into the crypto wallets in the names of the above-mentioned Chinese nationals,” added the ED.
Online gaming app: the pig butchering scam
ED’s probe has revealed that Fiewin adopted the modus operandi similar to other online frauds going on in the name of “pig butchering scams”.
“….The term “pig butchering” comes from the scammers’ practice of “fattening up” their victims by building trust over time before “slaughtering” them and stealing their money. In this kind of gaming/betting app, the players are incentivised to bet small amounts over very easy luck-based games. Once the player wins the small amounts, they are even allowed to withdraw some of the winnings. But when the amount increases, the player is not able to withdraw the same. Eventually, when the scammer extracts as much money as possible from the victim, they abruptly cut off all communication and disappear,” explained a source. “The fraudulent investment website or app is taken offline, and the victim is left with no way to access their supposed investment or contact the scammer,” the source added.
Online gaming app: Binance-The Telegram link
Based on ED’s efforts, Fiewin was banned by the government, but their investigation has revealed that new applications mushroomed in no time. “…. In the instant case, it was found that once the player wanted to join, he was directed to install the app and was made to join a Telegram group. Regular updates regarding how the money could be earned would be sent on the group to keep the player hooked into betting bigger amounts. Once the player recharged his account, the money was sent to the account of one of the recharge persons whose UPI ID was randomly displayed on the app. The recharge person gets his account credited with small amounts transferred by the gamer/player on the app and gets a commission of 3-5% on the same,” the source.
ETtechOnce the amounts cross a certain threshold, as per the instructions given on the Telegram group, the recharge person buys the USDT from the designated USDT seller and transfers the amount to the bank account of the USDT seller. The USDT seller in turn credits the crypto wallet (usually Binance) of the recharge person with the cryptocurrency.
“…The USDT seller makes a premium in this transaction compared to the normal trading of crypto over the exchange. The contacts of the crypto sellers were shared over the Telegram group (named FIEWIN) regularly. Once the wallet of the recharge person is credited with the crypto, he in turn would send the same to crypto wallets as communicated to him over the Telegram group,” the source further explained.
In the modus operandi, payout persons were recruited online by them paying hefty commissions. They were asked to open crypto wallets on various exchanges (usually Binance). These crypto wallets were then credited with the USDT that was to be sold by the payout persons on the exchange, and the fiat currency was thereby credited to the accounts of such individuals. “…These accounts were controlled by certain Chinese nationals to make the payouts to various players by utilising the various bulk payment platforms like Cashfree, Paytm, Instantpay, Paygate, etc. The payout persons aided and abetted this fraudulent process by receiving the crypto from an unknown source, selling the same for fiat currency, giving custody of their bank accounts to the foreign nationals, and getting registration on various payout gateways,” the source added.
Sources added that ED had sought information from Binance on the matter. The cryptocurrency major has joined the probe.
