The Enforcement Directorate (ED) has taken a significant step in its money-laundering investigation by provisionally attaching cryptocurrency worth ₹2,385 crore. These digital assets were held in approximately 100 crypto wallets beneficially owned by Pavel Prozorov, a Russian national. The probe is focused on the unauthorized operations of the forex-trading platform OctaFX.
Pavel Prozorov, identified as the mastermind behind OctaFX’s operations in earlier ED charge sheets, was recently apprehended by Spanish police for his alleged involvement in cybercrimes that have impacted several countries, including India. ED officials confirmed this development on Friday.
This substantial attachment of ₹2,385 crore in cryptocurrency marks the agency’s largest action to date against an accused individual located abroad. It’s important to note that cryptocurrency is a virtual currency and not recognized as legal tender in India.
The ED had previously shared crucial investigation details concerning Prozorov and other overseas-based accused with Spanish authorities on multiple occasions. These communications were aimed at seeking legal assistance to attach assets linked to the proceeds of crime that were situated within the European country.
Investigation findings suggest that OctaFX generated estimated profits exceeding ₹5,000 crore from its operations in India between 2019 and 2024. A significant portion of these earnings was allegedly transferred illegally overseas.
The agency is currently exploring legal and diplomatic avenues to question Prozorov as part of its ongoing investigation. However, officials have declined to comment on whether extradition proceedings might be initiated against the Russian national.
The OctaFX Fraud Unveiled
The ED’s investigation into OctaFX has revealed a fraudulent scheme where funds were collected from Indian investors under the guise of forex trading, despite the platform lacking authorization in India. OctaFX reportedly gained popularity through aggressive marketing, including sponsoring an Indian Premier League (IPL) team and utilizing influencer marketing campaigns via various production agencies.
The platform’s user acquisition strategy allegedly involved a referral-based incentive model. Payments to production agencies were reportedly made as foreign inward remittances through two Estonian companies, both of which are considered related entities of OctaFX and were controlled by Prozorov.
In October 2024, OctaFX was placed on the Reserve Bank of India’s (RBI) Alert List. This list comprises entities not permitted to engage in forex trading under the Foreign Exchange Management Act (FEMA) or operate an electronic trading platform (ETP) for forex transactions.
Prozorov is one of 54 individuals and entities implicated in the case. This includes at least 16 fictitious e-commerce firms based in Kerala, who have been named as accused in charge sheets filed by the ED in a Mumbai court last year.
OctaFX allegedly operated in India through its local subsidiary, OctaFX India Pvt Ltd, which has also been charge-sheeted. According to ED’s charge sheets, OctaFX India Pvt Ltd was directly involved in the money-laundering activities orchestrated by Prozorov, its former director and beneficial owner.
The ED alleges that the proceeds of the crime were diverted out of India disguised as payments for fake services provided by entities controlled by Prozorov. Prozorov, at the time, also served as the director of Octa Markets Incorporated, the primary operating entity for the OctaFX brand.
The ED’s money-laundering investigation was initiated following a case registered in December 2021 by the Shivaji Nagar police station in Pune. The complaint detailed allegations of defrauding investors by promising high returns through OctaFX’s forex trading services. Investors were reportedly lured with promises of 2x returns in five months and 3x returns in eight months.
Evidence suggests OctaFX systematically defrauded Indian investors of approximately ₹1,875 crore between July 2022 and April 2023, generating profits of around ₹800 crore. The investigation also revealed that OctaFX presented itself as an online forex, currency, and crypto trading platform without the necessary permissions from the RBI. To build trust, initial small profits were paid to investors, a common characteristic of Ponzi schemes.
OctaFX operated through a complex global network designed to evade regulatory oversight and move illicit funds across various jurisdictions. Marketing activities were allegedly managed by entities in the British Virgin Islands (BVI), a tax haven, while server and back-office operations were handled by companies and individuals in Spain.
Payment gateways were managed by entities in Estonia, with technical support provided by companies in Georgia. An entity in Cyprus served as the holding company for OctaFX’s Indian operations. Entities in Dubai, UAE, reportedly oversaw Indian operations through Russian promoters, while entities in Singapore facilitated the laundering of funds abroad through the export of fictitious services.
“Our investigation found that OctaFX manipulated trading operations using falsified charts and deliberate slippage, ensuring consistent investor losses,” an ED official stated. The platform also offered an ‘Introducing Brokers’ (IB) scheme, providing commissions to individuals and entities referring new clients based on their trading activity. Indian nationals were reportedly employed in Russia and Spain to manage dealings with Indian clients.
The Money Trail
OctaFX collected investor funds via UPI and local bank transfers, which were then routed through accounts of dummy Indian entities and individuals before being moved to multiple mule accounts. Unauthorized payment aggregators allegedly facilitated the collection and outward movement of funds into shell companies posing as e-commerce platforms, effectively masking the true nature of these transactions.
These aggregators reportedly provided merchant IDs and integration kits to dummy entities, allowing them to accept payments that appeared to be for legitimate goods or services. The collected funds were ultimately transferred abroad under the guise of fake imports to entities controlled by Prozorov in Spain, Estonia, Russia, Hong Kong, Singapore, the UAE, and the UK. Some of these laundered funds were later allegedly reintroduced into India as Foreign Direct Investment (FDI).
The misappropriated funds were allegedly used for luxury purchases, property acquisitions, buying luxury yachts, and expanding OctaFX’s global presence. A portion of these funds was also allegedly deposited into cryptocurrency wallets controlled by Prozorov.
In July of the previous year, ED searches reportedly uncovered evidence indicating that a portion of the funds obtained fraudulently from investors through OctaFX’s forex trading activities were channeled into Securities and Exchange Board of India (SEBI)-registered Alternative Investment Funds. This was done to legitimize the funds.
To date, the ED has attached assets worth over ₹2,681 crore in connection with this case. This includes 19 immovable properties and a luxury yacht named ‘Cherry’ located in Spain, allegedly owned by Prozorov.
Despite repeated attempts, OctaFX’s spokesperson could not be reached for comment on the ED’s allegations. In a previous statement to HT in July, an OctaFX spokesperson stated that Prozorov is not associated with Octa’s current operations or legal entities and that Octa operates in full compliance with applicable laws. The spokesperson added that Octa works with independent, third-party payment service providers who manage their own infrastructure and compliance, acting independently of Octa’s core business.