The Enforcement Directorate (ED) of India has discovered a ₹400 crore ($48 million) fraud through the online gaming app Fiewin linked to Chinese nationals. After the investigation, ₹25 crore (approx. $3 million) worth of assets owned through the scam has been frozen.
The case is a ripple that is shaking the gaming and cryptocurrency industries, linked to a complex cross-border financial network that pretends to deceive thousands of users. After receiving complaints from Fiewin users, India’s Ministry of Finance’s specialized financial investigation agency, ED, began looking into the case.
Promises of fast money lured these individuals, but once they invested and amassed substantial amounts, they were unable to withdraw their personal funds. According to the police, what initially appeared to be a scam involving a single Indian and a Chinese national turned out to be part of a highly coordinated scheme involving several Indian and other nationals.
The Scam’s Modus Operandi
Fiewin’s design initially seeded users with small initial payouts to gain their trust. But once enough money was deposited, the users couldn’t withdraw their funds. Early on, it created a sense of legitimacy to get users to invest and then trap them with larger amounts.
With social media promotions touting that users can easily earn large returns quickly, the app swiftly became popular, even though the actual tests were difficult to duplicate outside the lab. Police have arrested Indian nationals for their involvement in the scam. Arun Sahu and Alok Sahoo were among those detained, believed to be key players in Fiewin’s Indian operations.
Furthermore, Fiewin arrested software engineers Chetan Prakash and Joseph Stalin for their role in creating the app’s backend, which facilitated the smooth operation of the fraudulent system. But these people worked hand in hand with the Chinese nationals to maintain and run the app.
Cryptocurrency and Cross-Border Fraud
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The key to Fiewin was the use of crypto to carry money across borders, which makes it difficult for governments to get their hands on the money. The ED alleged that funds deposited by gamers were sent to what it described as ‘recharge persons’, who remitted the money into cryptocurrency.
The operation then transferred these digital assets to crypto wallets controlled by the Chinese masterminds involved. The ED traced nearly ₹400 crore ($48 million) from 8 Binance wallets, with Binance, one of the world’s biggest crypto exchanges by volume, helping to trace the money.
Because these wallets were associated with Chinese nationals, the fraud spread worldwide. Based on what the ED has discovered, the perpetrators currently use privacy-focused messaging apps and other sophisticated methods that make it difficult to identify their financial dealings.
The fact that Binance cooperated was instrumental in exposing how deep the fraud went, allowing for the movement of funds to be seen. The exchange said the scammers used a network of intermediaries and digital currencies to evade discovery, making the investigation all the harder.
The Ongoing Investigation
The ED’s investigation into that is far from over, and ₹25 crore has been frozen. Authorities are identifying additional individuals involved in the operation and tracing the remaining funds. The scam’s international scope has also led to discussions with law enforcement agencies in India and outside of India in order to dismantle the broader network behind the fraud.
The current case is further complicated by the involvement of Chinese nationals, which is raising concerns about the growing number of cross-border financial crimes facilitated by digital currency.
Other financial regulators in India are also considering new measures to regulate the use of cryptocurrency to prevent future scams, said the ED. The online gaming sector has gradually turned out to be extremely vulnerable to fraudulent activities, and efforts are underway to improve the sector’s oversight.
Conclusion
The Fiewin scam also alerts anyone interested in online fraud and unregulated cryptocurrency transactions about the potential risks. Stronger regulations to protect users and deter future financial crimes are required to prevent future crimes, according to the ED’s efforts to trace the remaining funds and bring the perpetrators to justice.
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