ED says crackdown on online betting websites found Chinese involvement

Agency seizes Rs 47 crore after searching more than 15 locations in Delhi, Gurugram, Mumbai and Pune

The Enforcement Directorate (ED) said on Saturday it has unearthed an online betting scam that involved Chinese nationals and used payment wallets such as Paytm, Cashfree and Razorpay to make remittances worth Rs 1,200 crore in India and abroad.

ED officials said they are tracking hundreds of websites, allegedly run by Chinese entities, and seized Rs 47 crore after searching more than 15 locations in Delhi, Gurugram, Mumbai and Pune on Friday. The agency froze accounts held in HSBC Bank and seized hard disk, laptops and incriminating documents, said sources.

The ED’s action is the part of a money laundering probe initiated after a first information report registered by the cyber cell unit of Hyderabad Police. The case was filed against Dokypay Technology and Linkyun Technology and three Linkyun managers, including a Chinese national. 

The federal agency allegedly found that some Chinese nationals, taking the help of Indian chartered accountants, floated multiple companies and promoted online betting under the garb of e-commerce. 

ED, while analysing the bank accounts of Dokypay Technology, allegedly found Rs 1,268 crore was collected in one year. Of this amount, Rs 300 crore came through Paytm’s gateway and about Rs 600 crore was transferred out. Outward foreign remittances for payments worth Rs 120 crore were allegedly made from the accounts of another company, Linkyun Technology. 

These online wallets had lax due diligence mechanisms and their non-reporting of suspicious transactions to the regulatory authorities helped the accused companies to launch pan India operations. It further said that apart from indulging in banned activities like online betting, this network of companies with their reliance on online wallets and their lax regulatory systems could have been used for hawala transactions as well, ED said in a statement on Saturday. 

ED is learnt to have in the process of obtaining information from online wallet companies, HSBC Bank and Registrar of Companies. 

ED officials said that after opening multiple bank accounts, the internet access credentials were couriered by Indian employees to China and major payment instructions came from the beneficial owners who were safely ensconced in China. Accused companies floated large numbers of similar-looking websites, which were hosted through Cloudflare, USA. These websites lured people to become members and to place bets on online apps, which promised attractive rewards on simple games of chance. 

Further, a network of agents were hired to attract new customers/members. These agents created closed Telegram, WhatsApp based groups to work for these websites and get customers. Referral codes were used to privately invite new members. This also helped the sponsoring member to earn commission. Digital payment platforms were used to collect money and pay commission to all these agent members. Hundreds of websites were created to promote online betting but were not activated daily. Some were activated for placing bets and the information on daily active websites was shared to members using Telegram groups.