Chinese nationals control instant loan, crypto frauds in India: ED report

Amid rising cybercrimes in India, Chinese nationals have come to dominate the illicit loan app- and cryptocurrency-related scams and have looted up to Rs 28,000 crore so far, according to a report by Enforcement Directorate (ED).

The Times of India has reported that the ED in its report noted what Chinese nationals, who are often based abroad, conduct these illicit activities with their associates in India. They often resort to blackmail to extort money from people.

The extent of Chinese nationals’ role came to light once the ED began investigating the likes of LoanPro, FastCredit, SmartRupee, and other similar loan apps over the past few years. These apps have duped people in more than 20 Indian states.

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How Chinese loan & crypto scams work

When it comes to loan, Chinese apps offer instant loans to people, but they end up trapping people with the lure of easy credit.

These so-called instant loans come with platform fees of up to 30-40 per cent of the principal amount, which is deducted at the time of disbursement, and the term of the credit could be as short as 7-14 days, according to ToI.

This means that people often have troubles repaying and loan apps’ staff often bullied and blackmailed their borrowers. Such harassment has led to cases of suicides as well among borrowers.

While Chinese nationals were found to be controlling these syndicates from abroad, their Indian associates ran the operations in the country from behind a veil of non-banking financial companies (NBFCs) and fintech and shell entities for laundering the proceeds of crime, according to the ED’s report.

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Moreover, Indian and foreign payments gateways were also found to be facilitating these transactions, the report found.

The ED has questioned some of these payment gateways.

In many cases, the ED found that proceeds of crime were converted into cryptocurrencies and siphoned off to China or Hong Kong or other Chinese territories.

Some of the companies flagged by the ED are Shinebay Technologies, which ran loan apps LoanPro, FastCredit, and SmartRupee, etc; HPZ Token, a cryptocurrency mining company that was found to have collected over Rs 2,200 crore in proceeds of crime; and an online app ‘LOXAM’, which promised very high returns on investments but siphoned off up to Rs 900 crore.