Mon Jan 27 19:36:03 IST 2025: ## Chennai ED Busts Digital Arrest Scam, Arrests Two Masterminds
**Chennai, January 27, 2025** – The Directorate of Enforcement (ED) has arrested two key figures behind a sophisticated digital arrest scam that defrauded a senior citizen of ₹33 lakh. One suspect was apprehended in Kolkata, the other in Delhi while attempting to flee the country. The duo managed mule accounts, converting illicit funds into cryptocurrency and transferring them internationally.
The arrests followed an FIR filed by the victim with Chennai Police, who reported being threatened with a “digital arrest” to extort money. The ED’s investigation uncovered a complex network of layered bank accounts used to launder the stolen funds. Raids across five states (West Bengal, Madhya Pradesh, Uttar Pradesh, Gujarat, and Maharashtra) yielded the seizure of mobile phones, laptops, and cryptocurrency (BTC and USDT).
The ED press release detailed a system where cash from mule accounts was converted into cryptocurrency and sent to overseas entities. The investigation also revealed the misuse of cash deposit machines (CDMs) by the accused to deposit cash into fintech companies’ accounts, further obscuring the money trail. Significant lapses in Know Your Customer (KYC) norms by several fintech companies were uncovered, raising concerns about hundreds of crores in potentially tainted money being processed. The ED is now scrutinizing the role of these fintech companies, their distributors, and associated bank accounts. The investigation continues.
First Piper 