India's Enforcement Directorate Freezes $1.5M in Bitcoin in Gaming App E-Nuggets Case

The agency has been conducting several search operations related to an "illegal loan apps" scam with China links .

AccessTimeIconSep 28, 2022 at 12:39 p.m. UTC
Updated Oct 3, 2022 at 2:00 p.m. UTC

Amitoj Singh is CoinDesk's regulatory reporter covering India. He holds BTC and ETH below CoinDesk's disclosure threshold of $1,000.

India's Enforcement Directorate (ED) has frozen cryptocurrency worth about 128 million rupees ($1.5 million) as part of a money-laundering investigation relating to a gaming app called E-Nuggets, according to a press release on Wednesday.

  • The investigation is related to a February 2021 complaint filed by regulators in India's eastern city of Kolkata against Aamir Khan, the app's creator, and others.
  • Earlier this month, the ED searched six locations and recovered more than $2 million in cash at Khan's residence.
  • The agency alleges that Khan and others launched E-Nuggets to collect money from the public in return for rewards on commissions but said Khan stopped withdrawals suddenly on different pretexts before he wiped out all data from the app's servers, including profile information.
  • Khan was transferring some of the money overseas via a cryptocurrency exchange, according to the ED. One dummy account was supposedly opened on Indian exchange WazirX, from where crypto purchased was then transferred to an account in Binance, which is the world's largest crypto exchange. A balance of as many as 77.6 bitcoins worth roughly $1.5 million has been frozen in that Binance account.
  • “The transparent nature of blockchain means that the transactions are publicly available and traceable – which is not an option with traditional financial transactions," Binance said in a statement to CoinDesk. "Every day, Binance assists a large number of law enforcement investigations to detect criminal activities. 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."
  • Khan's whereabouts and contact information weren't immediately known.
  • WazirX didn't immediately return requests for comment.
  • India's ED has been conducting several search operations related to an "illegal loan apps" scam with China links. It has investigated at least 10 crypto exchanges.

UPDATE (Sept. 28, 16:00 UTC): Adds acknowledgement of outreach to Khan or his representatives, along with a statement from Binance.

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Amitoj Singh is CoinDesk's regulatory reporter covering India. He holds BTC and ETH below CoinDesk's disclosure threshold of $1,000.

CoinDesk - Unknown

Amitoj Singh is CoinDesk's regulatory reporter covering India. He holds BTC and ETH below CoinDesk's disclosure threshold of $1,000.