ED raids crypto exchange Binance over gaming scam, Bitcoin worth Rs 23 cr frozen

Founded by Chinese-Canadian Changpeng Zhao and now based out of Cayman Islands, Binance has become the world’s leading crypto exchange. With taxation on transactions as well as proceeds from trading kicking in for Indian exchanges, Binance gained users, but also added how high taxes can hit the country’s crypto industry. Days after the assertion, the crypto exchange was raided by India’s Enforcement Directorate and Bitcoins were frozen in connection with a gaming app scam.

Swept into a murky game?

The search at Binance was carried out as part of an investigation in the e-nuggets online gaming scam, involving a Kolkata-based businessman’s son and his associates. ED has 150.22 bitcoins worth Rs 22.82 crore, and so far more than Rs 100 crore has been recovered in connection with the case. The mastermind Amir Khan and his associates used 300 fake accounts to launder money siphoned off from gamers by luring them  with commissions.

How does e-nuggets work?

E-nuggets was created as a lottery app to reap financial rewards by playing with real money, and cash was offered as bait even to download it. The greed of gamers was further exploited by offering commission for storing their cash in the app’s wallet, which was transferable whenever they wanted. But after paying commissions for a while, the scamsters disabled withdrawal from the wallets and the app was then shut.

Lack of clarity around crypto

An FIR in Kolkata shed light on the scam pulled off from one city to rob gamers across India and in Bangladesh as well as the gulf. The police have so far arrested six accused in the matter, and have frozen bitcoins multiple times. But this is the first time in connection to the case that ED has raided Binance. The crypto assets still don’t face any regulation in India, while they are taxed. Amidst lack of clarity about their legality, the scamsters used the virtual coins for laundering their ill gotten digital treasure.

Published on: Saturday, November 12, 2022, 06:41 PM IST