The ED on Tuesday said it has arrested an accused in connection with its money laundering probe against a Kerala-based businessman, who is alleged to have cheated more than 900 investors to the tune of Rs 1,200 crore in lieu of providing crypto currency to them.
Abdul Gafoor, one of the main stockist of the 'Morris Coin cryptocurrency', was taken into custody on March 24, it said.
He was produced before a court the next day and sent to Enforcement Directorate (ED) custody till March 31.
The federal investigation agency alleged Gafoor was not cooperating with the investigation and was "very evasive" in his replies.
"Considering the fact that Abdul Gafoor is one of the directors of Stoxglobal Brokers Pvt. Ltd. and has played an active role in facilitating the placement and layering of proceeds of crime, he has been placed under arrest on March 24," the agency said.
The ED case of money laundering stems from a Kerala Police (Malappuram crime branch unit) FIR filed against prime accused in the case, businessman Nishad K.
The agency alleged Nishad K "cheated several investors by accepting investments, under a ponzi scheme, through his three Bengaluru based firms — Long Reach Global, Long Reach Technologies and Morris Trading by offering high returns of dividend such as 3-5 per cent per day." According to the police complaint, "more than 900 investors were cheated to the tune of Rs 1,200 crore."
Probe found that "Nishad, the main accused person, had appointed those persons as pin stockist who had invested a minimum of Rs 10 lakh in Nishad's scheme and Nishad promised them that he would give five per cent as commission on the investment."
"They made aggressive enrolment of new members into an illegal money circulation scheme under the garb of multi-level marketing, resorted to the fraudulent practice of investing the money received from the investors in the Morris Coin crypto currency plan run by Nishad and others," the ED said.
This, it claimed, led to "viral proliferation of the scheme network and thereby made huge wrongful gain at the cost of investors." It had earlier said that the deposits taken from the general public were illegal and without any statutory permission from any regulatory agencies. It had in January attached assets worth Rs 36.72 crore of Nishad K, those of his associates and Indian Rupee equivalent of crypto currencies purchased out of the proceeds of crime by a close associate.
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