Indian Directorate of Enforcement Freezes $1.5M of Laundered Funds Linked to E-Nuggets Founder
The Indian Enforcement Directorate has seized $1.5 million worth of crypto as part of an ongoing investigation into the activities of Aamir Khan and others involved in a mobile gaming application, E-nuggets.
According to the ED, Khan, currently in police custody, created the app and solicited public investment. Users of E-nuggets were rewarded with a commission they could easily withdraw from the game’s wallet.
E-nuggets then paused withdrawals for no reason before deleting all users’ profile data from the app’s servers.
The ED launched a money-laundering investigation into Khan on Feb. 15, 2021, pursuant to the Prevention of Money Laundering Act (PMLA), following a complaint by Federal Bank Limited, a private sector financial institution headquartered in the port city of Kochi.
The ED has law enforcement powers and economic intelligence capabilities in India and has been responsible for several enforcement actions against crypto exchanges in the last year and a half.
Cops seize company assets
According to the ED, Khan had allegedly been laundering crypto funds overseas using two cryptocurrency exchanges. Khan had purchased crypto assets from WazirX with the proceeds from the app using a pseudonym before transferring almost 78 BTC (approx. $1.5 million) to Binance. The Binance funds have subsequently been frozen.
In addition to the crypto seizure, the ED arrested four more suspects who revealed the location of the company’s office, where the ED found and seized computers, mobile SIM cards linked to multiple bank accounts, and numerous bank cards.
The ED has also conducted a raid at Khan’s residence, where it found and seized Rs 17.32 Crore (about $2.1 million). In Sep. 2022, the ED conducted raids of six premises in Kolkata.
Binance hits back at AML violation allegations
This investigation isn’t the first of its kind in India. In June last year, the ED launched an investigation into Binance for allowing Chinese nationals to launder criminal proceeds through Binance before transferring them to WazirX. It later seized the bank assets of one of the directors of Zanmai Lab Private Ltd, WazirX’S operator.
On Sep. 1, 2022, federal prosecutors from the U.S. requested Binance to produce evidence of its anti-money laundering checks to ensure that the company did not violate the Bank Secrecy Act. At the time, a Binance spokesperson refused to comment on the Justice Department’s requests.
Binance also disputed an investigation by Reuters, claiming that the company’s growth was accompanied by poor Know-Your-Customer policies, a key component of anti-money laundering practices. It claims it has spent “tens of millions of dollars” recruiting a 120-person cyber forensics team with backgrounds in international law enforcement investigation agencies like the Internal Revenue Service, the Federal Bureau of Investigation, and the U.S. Secret Service.
“Binance is working with law enforcement, judicial authorities and banks to improve our defences against these types of scams and protect our users. And, we continue to build new partnerships with some of the world’s leading experts in the field,” the company said in a May 2022 blog post.
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