ED arrests 2 Chinese persons for running fraud 'online loan app' during pandemic

New Delhi: The Enforcement Directorate on Tuesday said it has arrested two Chinese nationals who ran illegal digital loan apps to "cheat" gullible people during the Covid-19 pandemic and they used the WazirX crypto currency platform to route funds.

Xiao Ya Mao and Wu Yuanlun were taken into custody on November 13 under the provisions of the Prevention of Money Laundering Act (PMLA) from Tiruchirappalli in Tamil Nadu, the federal agency said in a statement.

The two have been sent to jail under judicial custody till November 29, it said.

The probe pertains to a case booked against digital loan apps operated by Chinese nationals who indulged in disbursing short-term instant loans through various mobile applications and charged "exploitative" rate of interest from people.

These funds were later routed through the WazirX crypto trading platform and were withdrawn through various such (crypto currency) wallets outside the country including Hong Kong, as per the ED.

A clutch of police FIRs, which the ED took cognisance of to file its case under the PMLA, said the complainants (victims) downloaded the app (mobile application) in their phones and applied for micro loans ranging between Rs 5,000-10,000. These people were made to share their personal information, KYC documents, photos, bank account details along with access to their contact list, photos, videos etc., it said.

In case of failure in repaying the loan, the victims were forced to take fresh loans from other apps to repay the previous one and thus, they fell into this trap, the ED found.

The family and friends of the borrowers were called and "abused in filthy language" by the agents of these Chinese operatives and messages were dropped in WhatsApp groups that were created by bringing their contacts together after lifting them from their phones, the investigation found.

The photos of the borrowers were also "morphed" and they were "blackmailed" saying these pictures would be posted on social media platforms, as per the agency.

Some Chinese persons had incorporated companies like Toucolor Technologies Private Limited and Truekindle Technology Private Limited in 2020 when the COVID-19 pandemic hit India. Two Indian employees of the company were made "dummy" directors by "forcing" them to sign documents, it alleged.

The entire business operations, however, were run by the Chinese.

The ED found that a "large" number of people "desperate" for money had taken instant short-term loans and at the time of disbursal of loan, about 20-30 per cent of the sanctioned amount was deducted upfront in the name of processing fees and other charges.

The tenure of the loan was about 7-15 days and the interest rate was "exploitative".

Loans worth Rs. 49.2 crore were disbursed by these accused and out of this Rs 3.54 crore was brought through crypto into wallets like WazirX during August-December 2020 which were later withdrawn in Indian currency from local bank accounts, as per the ED.