ED Issues Letter Rogatory (LR) To Spain In OctaFX Money Laundering Probe

Mumbai: The Enforcement Directorate (ED) has issued a Letter Rogatory (LR) to Spain, seeking assistance in its investigation into OctaFX, a forex trading platform allegedly involved in money laundering through SEBI-regulated Alternative Investment Funds (AIFs). The platform, owned by a Russian national, has left Indian authorities stunned by its alleged intricate global operations.

OctaFX operates across multiple jurisdictions, with its servers located in Barcelona, technical support in Georgia, headquarters in Cyprus, banking links in Singapore, and marketing teams in Estonia and the British Virgin Islands (BVI). The platform, which was blacklisted by the Reserve Bank of India (RBI), previously sponsored an Indian Premier League (IPL) team. It is accused of manipulating trades, offering extreme leverage to trap traders, and misusing funds.

The Letter Rogatory LR, which was initiated in August, requests Spanish authorities to assist in accessing key evidence stored on OctaFX’s Barcelona servers. The request, supported by a Mumbai court under Section 57 of the Prevention of Money Laundering Act (PMLA), is a crucial step in the ED's efforts to establish the money trail. The prosecution complaint is expected to be filed before the PMLA Special Court on October 4.

During the course of its investigation, ED uncovered that OctaFX, a forex trading platform accused of money laundering, funneled a portion of the funds deceitfully obtained from investors into SEBI-registered Alternative Investment Funds (AIFs) to disguise the illicit proceeds as legitimate financial investments. By channeling the profits from its dubious trading activities into AIFs, OctaFX attempted to legitimize the funds and avoid scrutiny from Indian regulatory authorities. This strategy helped the platform project a façade of financial credibility, misleading both investors and regulators.

Further investigation revealed that OctaFX utilized entities based in offshore tax havens, particularly in the British Virgin Islands (BVI) and Estonia, to transfer and obscure the movement of funds. These offshore entities were instrumental in executing promotional campaigns aimed at attracting new investors to the platform. OctaFX allocated significant resources to marketing, and to that end, it hired soap opera stars and social media influencers to promote its app. These celebrities, many of whom were well-known in India, lent credibility to OctaFX’s operations by endorsing the platform on social media, in television advertisements, and across various digital platforms.

The ED recently recorded the statements of television actors Krystle D'Souza and Karan Wahi, who allegedly promoted and endorsed the app during 2020-21. These celebrities were reportedly associated with the illegal forex trading app OctaFX, for pramotion it across social media and television during the COVID-19 pandemic.

In addition to its marketing strategies, OctaFX allegedly hired retired bankers to train its staff on handling queries from law enforcement agencies and traders. The platform reportedly ran its Indian operations from Dubai, employing expatriate Indians to build trust among investors. Traders were allegedly incentivized with gifts and encouraged to act as introducing brokers, while the platform frequently changed its bank accounts. As more traders were lured to the platform, OctaFX allegedly raised the minimum cash deposit amount, further complicating the investigation.