ED freezes Rs 21.4 crore of forex trading app OctaFX

The Enforcement Directorate (ED) has frozen Rs 21.4 crore of forex trading app OctaFX in connection with a case related to alleged illegal online trade. The agency had earlier conducted searches at various premises of the company and related concerns under the provisions of FEMA (Foreign Exchange Management Act) in the case of "illegal online forex trading through international brokers namely OctaFx trading app and website www.octafx.com".

The FEMA investigation revealed that the online trading app and website of the company are operating in India in association with India base entity OctaFx India Pvt Ltd, the central probe agency said in a statement. 

This forex trading platform, the agency said, is widely promoted on social networking sites and is also following referral-based incentive models for acquiring users to their platforms. Funds are collected from users, majorly through UPI/local bank transfers, and are channelized through dummy entities.
 
These funds are credited in the bank accounts of various dummy entities and domestically transferred to other banks for the purpose of layering and later on cross border transactions have been undertaken.

The ED said that it has found nexus between international online forex trading brokers and their Indian partners or agents. The app and its website have not been authorized by the RBI to deal in forex trading. The conduct and operations of forex trading (not being conducted on recognized stock exchange) are illegal, and also violate FEMA regulations, the agency said.

The probe revealed that multiple accounts of different Indian banks were being shown to investors and users on OctaFx trading app and www.octafx.com for collecting funds in the guise of facilitating forex trading. The accumulated funds, after defrauding these investors, were simultaneously transferred to multiple e-wallet accounts such as Neteller, and Skrill or to bank accounts of dummy entities. 

A major portion of the defrauded amount on this trading app was used to purchase cryptocurrencies, and assets through Zanmai Labs Pvt. Ltd. Zanmai labs is providing banking channels and a bridge to deposit the rupee to Wazirx wallets which ultimately were transferred to Binance exchange (a crypto exchange based in Cayman Island) leading to transfer the Indian currency to overseas entities in the form of cryptocurrencies, the agency said.