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Indian authorities have announced the seizure of more than $280 million from the mastermind of the OctaFX Ponzi scam. In a statement released by the Enforcement Directorate (ED) on Friday, the agency noted that the alleged mastermind of the operation had also been arrested in Spain.
According to the Indian authority, the seizure was carried out in line with the anti-money laundering law, and the mastermind of the operation is a Spanish national who is now behind bars. Indian authorities claim the case is tied to a fraud where several investors are alleged to have been scammed out of their hard-earned funds. They claimed that they were promised high returns if they invested in the OctaFX forex trading platform, a promise that the administrators of the platform failed to keep.
Indian authorities seize funds and arrest Ponzi mastermind
As previously reported by Cryptopolitan, Indian authorities claimed some weeks ago that they were investigating the illegal trading platform. The ED mentioned at the time that the platform had facilitated the laundering of more than $96 million in the past nine months. The Indian authorities claimed at the time that the investigation was part of a transcontinental operation that studied the conversion of proceeds of crime into digital assets.
The authorities mentioned that OctaFX layered some of the illicit funds it made, enabling the criminals to launder such funds and move them out of the country. The ED noted that the platform allegedly used fake import services from Singapore to launder the proceeds from India. In the case studied by the Indian authorities, more than $19.4 million worth of assets, including a yacht, a villa located in Spain, and several funds inside different bank accounts, were connected to the con.
Indian authorities revealed that the mastermind of the fraud, Pavel Prozorov, was arrested in Spain by local police based on his involvement in criminal activities that spanned several countries. According to the ED, OctaFX systematically duped Indians out of $211.3 million between July 2022 and April 2023, generating profits of about $90.2 million. “The company operated from 2019-2024 and the total profits from India are estimated to exceed Rs 5,000 crore, much of which has been “illicitly” transferred overseas”, it said.
ED details the operations of OctaFX
The ED claimed that OctaFX presented itself as an online Forex trading platform for currency, commodities, and crypto trading without express permission from the Reserve Bank of India. “The initial investors received small profits to build trust, as is generally seen in a typical Ponzi scheme,” it said. The ED noted that its probe discovered that the platform operated through a “distributed global network” designed to “evade” regulatory scrutiny, and it “layered” illicit funds across jurisdictions.
The marketing activities of the platform were handled by entities located in the British Virgin Islands (BVI), some firms and persons based in Spain hosted servers for back-office operations, while entities in Estonia managed payment gateways. They also had people in Georgia who were in charge of providing technical support, and an entity in Cyprus served as the holding firm for the Indian platform. The ED claims the platform was controlled by some entities in Dubai, while persons in Singapore were in charge of laundering funds abroad.
OctaFX collected payments via the UPI payment method and local bank transfers, which passed through dummy Indian entities and individual accounts before they were layered through multiple mule accounts. Indian authorities claimed the funds were moved abroad under the guise of fake imports to entities controlled by Prozorov in Spain, Russia, Estonia, Singapore, the UK, and Hong Kong. They also claimed that some of the funds were reintroduced into India as foreign direct investments.
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