The Directorate of Enforcement (ED) on 19 June, 2024 has arrested Manideep Mago under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, in connection with a significant illegal foreign remittances case. Mago was presented before the court on June 18, 2024, where he was remanded to five days of ED custody until June 23, 2024.
The ED initiated its investigation based on information that a Delhi-based company had sold cryptocurrencies worth over ₹1858 crore on various crypto exchanges. Preliminary investigations revealed that the company and its related entities had also made foreign outward remittances exceeding ₹3500 crore. Additionally, more than ₹1300 crore in cash deposits were made into the bank accounts of these entities. This led the ED to conduct a search action under the Foreign Exchange Management Act (FEMA).
During the search proceedings, it was uncovered that an international hawala syndicate operating in Delhi had been collecting cash from exporters and importers and remitting it abroad against bogus invoices. This syndicate had facilitated over ₹3500 crore in foreign outward remittances to Canada and Hong Kong under the guise of payments for services like “online lease of GPU servers for crypto mining,” educational software, and bare metal server leases. Members of the syndicate had established companies in Hong Kong and Canada to further their operations, which included illegal crypto mining and arbitrage trading. The investigation revealed the involvement of chartered accountants and several bank officials, who helped generate fake invoices and manipulated financial records to justify cash deposits.
The ED’s findings were shared with the Crime Branch of the Delhi Police, leading to the registration of an FIR against the syndicate members. This, in turn, prompted the ED to register an Enforcement Case Information Report (ECIR) to investigate the matter under PMLA provisions. Notably, the Delhi Police had previously arrested Manideep Mago in connection with this case, and the ED now has five days to interrogate him further.
The ED’s decisive action in this case marks a significant step toward regulating the often elusive cryptocurrency sector. By cracking down on such fraudulent transactions, the ED not only aims to uphold the integrity of financial systems but also enhances the credibility of government organizations in tracking and prosecuting complex financial crimes involving digital assets. This move is likely to serve as a deterrent to other potential offenders and demonstrates the government’s commitment to ensuring that the burgeoning crypto market operates within the bounds of the law.
Further investigations are ongoing as the ED continues to unravel the full extent of the syndicate’s operations and their impact on India’s financial stability.
