Mumbai: Enforcement Directorate (ED) has temporarily attached the price of cryptocurrency As part of a money-laundering investigation into the unauthorized operations of forex-trading platform OctaFX, Rs 2,385 crore lying in around 100 crypto wallets beneficially owned by Russian national Pavel Prozorov has been seized.
ED officials on Friday said Prozorov, who was named the mastermind behind the operations of OctaFX in two ED chargesheets filed in the case last year, was recently arrested by the police in Spain for his alleged involvement in cyber crimes affecting several countries including India.
An ED official requesting anonymity said the attachment of Rs 2,385 crore is the biggest action taken by the agency against a foreign-based accused. Cryptocurrency is a type of virtual currency which is not legal tender in India.
Agency officials said the ED had shared details related to the investigation regarding Prozorov and other foreign-based accused with the Spanish authorities several times in recent times, while seeking their legal assistance in attaching properties linked to the proceeds of crime located in the European country.
According to investigation, OctaFX’s total estimated profit from India could be higher than this 5,000 crore, given that it operated in the country from 2019 to 2024. Most of this amount was allegedly transferred abroad illegally, officials said.
The agency is now exploring legal and diplomatic options to interrogate Prozorov as part of its investigation, though an official did not comment when HT asked if the Russian national could be extradited to India.
OctaFX Scam
The ED’s money-laundering investigation revealed that OctaFX was allegedly at the center of a fraudulent scheme that involved collecting funds from Indian investors under the pretext of forex trading, for which it was not authorized in India. According to the ED charge sheets, the platform allegedly gained popularity through aggressive promotions, which included sponsoring the Indian Premier League (IPL) team and engaging various production agencies for influencer marketing.
The platform reportedly followed a referral-based incentive model to acquire users. Payments to these production agencies were allegedly made in the form of foreign inward remittances through two Estonian companies. According to the charge sheet, both are related entities of OctaFX and controlled by Prozorov.
Officials said that in October 2024, OctaFX appeared in the Reserve Bank of India (RBI) alert list, which includes the names of entities that are not allowed to trade in foreign exchange under the Foreign Exchange Management Act (FEMA), or operate electronic trading platforms (ETPs) for foreign exchange transactions.
Prozorov is among 54 people and entities, including at least 16 Kerala-based fake e-commerce firms, named as accused in two chargesheets submitted by the agency in a Mumbai court last year.
The OctaFX trading app and website reportedly operates in India through its local branch, OctaFX India Private Limited, which has also been chargesheeted in the case. According to the ED charge sheet, OctaFX India Private Limited was directly involved in a money-laundering operation organized by its one-time director and beneficial owner, Prozorov.
According to the ED, the proceeds of crime were allegedly repatriated out of India under the guise of fraudulent import of services to entities controlled by Prozorov. The Russian national was, at the time, a director of another indicted entity, Octa Markets Incorporated, which served as the primary operating entity of the OctaFX brand.
The ED initiated a money-laundering investigation based on a case registered in December 2021 by Pune’s Shivaji Nagar police station against several individuals for defrauding investors by promising high returns through OctaFX. The accused allegedly lured gullible investors by claiming that they would get 2x returns in five months and 3x returns in eight months if they invested in forex trading through OctaFX.
OctaFX Allegedly Systematically Defrauded Indian Investors Profit of Rs 1,875 crore made between July 2022 and April 2023 According to ED charge sheet, Rs 800 crore. The investigation also revealed that OctaFX had presented itself to investors as an online forex-trading platform for currency, commodity and crypto trading, without the requisite permission from the RBI. ED officials said investors will initially receive small benefits to build trust and incentivize them, as is generally seen in a typical Ponzi scheme.
OctaFX reportedly operates through a distributed global network, designed to avoid regulatory scrutiny and spread illicit funds across jurisdictions for diversion. Authorities said the investigation revealed that its marketing activities were allegedly controlled by entities in the tax haven British Virgin Islands (BVI), while some companies and individuals in Spain hosted servers and back-office operations.
Some Estonian-based entities reportedly managed the payment gateway for the platform, while Georgia-based companies provided technical support. A Cypriot entity acts as the holding company for the Indian arm of OctaFX. The investigation revealed that entities and individuals in Dubai, United Arab Emirates (UAE) allegedly supervised Indian operations through Russian promoters, while entities in Singapore facilitated the export of fraudulent services to launder money abroad.
“The ED investigation found that OctaFX allegedly manipulated trading operations by using false candlestick charts and deliberate slippage, causing sustained losses to investors,” an ED official said. OctaFX had reportedly launched a scheme called Introducing Brokers (IB) to lure more investors, offering huge commissions based on client-trading activity to individuals and institutions who referred clients. OctaFX has also appointed Indian nationals in Russia and Spain to deal with Indian clients, officials said.
money path
OctaFX allegedly collected investors’ funds through UPI and local bank transfers, which were routed through the accounts of fake Indian entities and individuals to be transferred to multiple origin accounts. The investigation revealed that unauthorized payment aggregators were found allegedly facilitating the collection and outward movement of funds in shell companies that masqueraded as e-commerce platforms, effectively hiding the true nature of the transactions.
Unauthorized payment aggregators allegedly provided merchant IDs and integration kits to dummy entities, enabling them to accept payments for legitimate goods or services. Authorities said the money collected was eventually transferred abroad under the guise of fake imports to entities controlled by Prozorov in Spain, Estonia, Russia, Hong Kong, Singapore, the United Arab Emirates and the UK. A portion of the money laundered abroad was later allegedly repatriated to India in the form of foreign direct investment (FDI), officials said.
The embezzled funds were then used for luxury consumption, property acquisition, purchase of luxury yachts and expanding OctaFX’s global footprint. A portion of these funds were also reportedly parked in a cryptocurrency wallet controlled by Prozorov.
In July last year, the ED had conducted searches and claimed to have uncovered evidence that a part of the money fraudulently received from investors under the guise of forex trading on OctaFX was invested in alternative investment funds registered with the Securities and Exchange Board of India (SEBI) to present them as legitimate funds.
ED has so far seized assets worth more than this The case involves Rs 2,681 crore, which includes 19 immovable properties and a luxury yacht named Cherry in Spain, allegedly owned by Prozorov.
Despite several attempts, HT could not contact OctaFX spokesperson for comment on ED’s allegations in the case. In July, an OctaFX spokesperson had told HT, “We confirm that Mr. Prozorov is not associated with Octa’s current operations or legal entities. Octa operates in full compliance with applicable laws and regulatory frameworks. Like many international brokers, we work with independent, third-party payment service providers to process transactions. These providers follow their own basic procedures, including KYC. Manage frameworks and compliance, and operate independently from our core business. We have no involvement in their internal processes beyond the initial broker-client transaction layer.”
