An enormous Rs 400 crore online gaming scam involving Chinese nationals has been discovered by the Enforcement Directorate (ED) in collaboration with the international cryptocurrency exchange Binance.

Four Indian nationals who were reportedly involved in money laundering through the Fiewin gambling app were arrested as a result of this raid. The ED has also attached assets linked to the scheme, including bitcoin holdings.

The ED investigation found that Chinese nationals, with help from their Indian collaborators, were purportedly running the illicit betting and gambling app Fiewin. Arun Sahu, Alok Sahu, Chetan Prakash, and Joseph Stalin are currently in detention. In a statement, Binance said that the ED's exposure of the Fiewin scam was made possible in large part by the company's internal intelligence team.

Fiewin app crackdown: Exposing the Scam

The gaming platform defrauded its players of over $47.6 million (about Rs 400 crore) by offering mini-games that would yield quick returns, but restricting withdrawals once user accounts reached a significant amount of money.

Fiewin was advertised on YouTube, Facebook, and other digital channels as an app for quick and simple moneymaking. Simple games like Minesweeper and colour prediction were available on the app, which only required players' luck and no expertise.

Fiewin app crackdown
Image Source:
AppstoreSpy

Money from Fiewin customers was allegedly sent to the bank accounts of Indian "recharge persons," such as Arun and Alok Sahu, who are charged with turning the money into cryptocurrency and sending it to Chinese nationals' Binance wallets. Chetan Prakash helped with the conversion, while Joseph Stalin secured the involvement of Chinese national Pie Pengyun in a local payout service company.

According to the ED probe, about Rs 400 crore was generated from this fraud and sent to seven Binance wallets linked to Chinese people, as revealed by access log IP addresses showing operations from China.

The ED has identified Chinese nationals Huang Liangliang, Zhang Longlong, and Zheng Wenjun as the suspected recipients of cash in their Binance accounts after substantial stacking across numerous crypto exchanges. A provisional attachment order has been issued for these citizens' properties totalling Rs 25.78 crores, including bitcoin valued Rs 24.9 crores.

The investigation also revealed that the Fiewin app profits in the 400 crores were piled and laundered through various accounts before being used to purchase both moveable and immovable assets. A considerable percentage of the revenues were transferred via cryptocurrencies, using a variety of private and exchange-based wallets.

Binance's Role

According to Binance, the Rs 400 crore funds were transferred to numerous cryptocurrency addresses, which were eventually linked back to the operation. Throughout the ED's investigation, Binance's Financial Intelligence Unit (FIU) provided critical information that assisted in tracking down the funds and exposing the fraudulent network. The exchange claims it supplied technological insights and analysis to help authorities conduct a thorough probe into Fiewin's operations.

Officials stated that the fraud operated in a manner similar to "pig butchering" schemes, in which victims are urged to deposit tiny amounts in seemingly simple and successful activities. Small winnings are first permitted to be taken to create trust, but when stakes rise, users are unable to withdraw their funds, and the culprits flee with the money.

Despite the government's ban on Fiewin, the network grew by exploiting loopholes. Players were driven to Telegram groups, where they received updates and were encouraged to place higher bets.
The funds sent by gamers were credited to the accounts of recharge agents, who received a commission for their efforts.

When sums reached a particular threshold, recharge users were asked to purchase USDT from selected sellers and transfer the funds to their crypto wallets, usually on Binance. They subsequently sent the USDT to the specified wallets, as instructed by the gang. These payoff handlers turned the cryptocurrency into cash using multiple exchanges before giving it over to the Chinese scammers.

The investigation in Fiewin app crackdown has shown the complex procedures utilised by the fraudsters, which involve numerous levels of transactions to prevent detection. The network used bulk payment systems like Cashfree and Paytm to make payouts, complicating fund tracing. In an effort to dissolve this complex network, the ED continues to probe into the matter.

You might also be interested in: Ex-Tamil Nadu minister Senthil Balaji granted bail in cash-for-jobs scam case