The Tamil Nadu Police has transferred the investigation into six cases of alleged FQL multi-level marketing and cryptocurrency trading scam to the Economic Offences Wing (EOW) following a huge surge in complaints from alleged investors in Madurai and other southern districts. The move came after early investigations reportedly unearthed cryptocurrency-related financial transactions and authorities are investigating the alleged network and movement of money in detail.
Investors were attracted to the scheme in part by promises of unusual returns from cryptocurrency trading, police said. Potential investors were told that their money could be doubled in 40 to 45 days, they said. The promises encouraged several people to invest money through local agents in the operation. It is alleged that there are FQL Investment Trading, FQL Exchange App and VG Investment Group Syndicate.
Police said the alleged network had been operating for about seven months. Local agents had approached prospective investors to advise them on the scheme, telling them that cryptocurrency trading could produce very high returns. Investors were asked to pay with cash, G-Pay and UPI payments, they said.
One of the main aspects of the preliminary investigation is the conversion of the funds collected into Tether, known as USDT (the cryptocurrency symbol of the company). According to the police report, some of the money collected from investors was converted into USDT and transferred or credited to cryptocurrency wallets of FQL and VG. Investigators will also investigate the transactions with wallets connected to Binance and whether the alleged financial network was also present in India.
The amount lost to investors has not yet been disclosed by police. The overall financial impact will be established by authorities as they collect complaints, analyze banking records and trace cryptocurrency transactions. Now the investigation has been handed over to the EOW, the financial trail will be more closely examined.
Several investors have admitted to being initially shown increasing balances and returns through the scheme's platform. These reported gains allegedly gave confidence to participants and led some investors to put more money in their accounts. But problems emerged when investors tried to withdraw their funds.
As a result of the complaints, withdrawal requests failed and some investors lost access to the balance in their accounts. Some participants were also asked to make more payments during this period. At the same time, the FQL-linked application was shut down and investors lost access to their purported account balance.
The shutdown of the operation brought more victims to police and district administration officials. Investors were looking for assistance in recovering their money and wanted to know more about the individuals and companies involved in the scheme. Madurai was the site of the complaints most where investigators started to collect information from people who had invested in the scheme.
So far six cases have been registered. Three were registered in Madurai and one case each in Dindigul, Virudhunagar and Sivaganga. Police have arrested 17 accused persons in connection with the cases and remanded in judicial custody. In order to prevent money from being transferred further to the accused bank accounts, authorities have frozen 13 bank accounts.
The number of complaints received in Madurai has led the district administration to organise a more systematic process of acquiring information from alleged investors. Melur, Alanganallur and other areas have reached out to officials to provide information about their investments and the losses they claim to have suffered.
Special officials at Madurai District Collectorate will be issuing petitions to the complainants and compiling data on the amount invested, the payment method and the alleged losses of the alleged offenders. If the information is gathered, the scale of the alleged operation will be ascertained and the patterns of complaint will be identified.
The transfer of the cases to the Economic Offences Wing shows the complexity of the allegations. Police have cited the huge number of potential victims among them; the number of districts involved in the investigation; cryptocurrency-related activities and suspected international connections as reasons for the decision. The EOW is responsible for investigating complex financial crimes, so will be very interested in the alleged financial structure of the operation.
Investigators will likely track the movement of money between bank and digital payment channels. Bank transfers, UPI payments, cash transactions and cryptocurrency movements may all be part of the financial investigation. We expect that they will pay particular attention to how money is converted into USDT and how cryptocurrency wallets move.
The alleged involvement of Binance-linked wallets may add another layer of complexity to the investigation. The authorities may have to determine which wallets received the cryptocurrency, who controlled it, and whether the funds were transferred to other wallets or platforms. Any suspected cross-border movement of funds may also need to be worked out with other relevant agencies and international partners.
The investigation may also involve local agents who’ve been involved in the scheme. The investigators will need to determine whether these people know or are involved in the alleged fraud, or were intermediaries or participated in the investment. The actual role of each person will ultimately come down to evidence gathered in the investigation and related legal proceedings.
The allegations also highlight the risks of investing money in schemes with high or guaranteed returns. Cryptocurrency markets can be volatile and claims that investments can reliably double within a short period should be treated with caution. Investors should check the platform's credentials independently, be aware of the risks involved and not just buy on the basis of high returns.
The current priority for the victims in Tamil Nadu is to recover their money and determine what they have invested in. EOW could help to identify the alleged network, what it is financially behind and the ultimate beneficiary of the funds.
As the investigators dig into banks, digital payments and cryptocurrency wallets, more may be known about the scale and scope of the alleged FQL operation. If there is evidence of other individuals or organisations involved, they will be identified as well.
A transfer of all six cases to the EOW is a major step in the investigation. With multiple districts involved and dozens of alleged victims and a financial trail of cryptocurrency transactions, the investigation is likely to be detailed and it will be time-consuming. It will not be until the investigation is complete and allegations have been established through due legal process that the accused individuals will be entitled to a presumption of innocence.
For now the growing number of complaints has placed the alleged FQL investment operation under intensified scrutiny. The investigation will investigate how investors were allegedly recruited, where their money went, who benefited from the transactions and if the cryptocurrency-centered network extended beyond the people already arrested.
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