India freezes $1.5M of laundered funds linked to mobile gaming scam

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India’s fight against digital asset money laundering isn’t letting up any time soon. In the latest crackdown, the country’s Enforcement Directorate (ED) has frozen over $1.5 million worth of BTC held at Binance by a local mobile gaming scam.

ED, India’s economic intelligence agency, announced on September 28 that it had frozen a Binance wallet that held 77.62710139 BTC, worth Rs 12.83 Crore ($1.57 million) under the provision of the country’s Prevention of Money Laundering Act.

The crackdown is part of an ongoing probe into Aamir Khan and other operators of E-Nuggets, a mobile game that ED claims was developed to defraud unsuspecting Indian investors. 

“Further, after collecting seizable amount of money from the public, all of a sudden withdrawal from the said App was stopped on one pretext or the other. Thereafter, all data including profile information was wiped off from the said App servers,” ED’s press release read. 

Having raised millions of dollars from Indians, Khan allegedly turned to digital assets to launder the money and transfer it out of the country. He started by opening a ‘dummy account’ under a different name at WazirX, one of India’s largest exchanges whose link to Binance has been the subject of controversy in recent months.

The BTC was then transferred to Binance, where it was held when the ED intervened. 

In a statement to the media, Binance played off the incident as a win for the embattled exchange, saying it proves that Bitcoin isn’t for criminals. 

“The transparent nature of blockchain means that the transactions are publicly available and traceable – which is not an option with traditional financial transactions. We can confirm that Binance froze the funds at the request of the Enforcement Directorate. It’s our position to cooperate fully and collaboratively with all legally valid requests and inquiries,” the exchange claimed, even as it faces dozens of regulatory hurdles for operating illegally, offering unlicensed products, lax KYC programs, and other crimes.

On its part, WazirX claimed to be cooperating with regulators “by providing them with all the necessary details, information and documents of the alleged accused sought by the investigators.” However, it didn’t explain how the criminals were able to open accounts under fake names, purchase millions of dollars’ worth of BTC and move it around.

The crackdown is part of the ED’s ongoing probe into the use of digital assets to launder money and move hundreds of millions of dollars out of India. WazirX has been at the heart of these investigations, culminating in the ED freezing over $8 million in assets owned by the exchange. ED was also concerned about Binance’s role at WazirX; while for years Binance was believed to own the Indian exchange, CEO Changpeng Zhao denied the claims recently.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.