The Enforcement Directorate (ED) arrested two Chinese nationals, named Xiao Ya Mao and Wu Yuanlun, in connection with a money laundering case related to digital loan apps operating across India.
The accused were detained in Tiruchirappalli, Tamil Nadu, under the Prevention of Money Laundering Act (PMLA), 2002. The Principal Sessions Judge in Chennai remanded them to ED custody for three days, with their judicial custody extended until November 29, 2024.
As part of the ongoing investigation, ED has frozen 96 bank accounts across Delhi NCR, Haryana, Punjab, Gujarat, and Chandigarh, containing a total balance of Rs 19.43 Crore.
The case centred around several Chinese-run digital lending applications offering short-term loans at exorbitant interest rates. The apps charged massive upfront processing fees, sometimes as high as 30 per cent and exploited the borrowers through threats and defamatory tactics. Borrowers were coerced into sharing personal information such as photos, videos, bank details, and contact lists when they applied for micro loans ranging from Rs 5,000 to Rs 10,000. When they failed to repay, the lenders resorted to harassment, using the borrowers’ personal data to extort money.
The investigation revealed that the accused, arrested on November 13, set up two companies, M/s Toucolor Technologies Private Limited and M/s Truekindle Technology Private Limited, in 2020. These companies were operated using dummy Indian directors to sign official documents.
The accused reportedly created cryptocurrency wallets on the WazirX platform under the names of Indian directors. Between August and December 2020, they transferred funds worth Rs 3.54 crore in cryptocurrencies, which were later converted into Indian currency and used to fund loan disbursements. The recovered loan amount, totaling Rs. 5.02 Crore, was also funnelled into cryptocurrencies and syphoned off to foreign wallets in Hong Kong, laundering the proceeds of crime.
In some cases, borrowers’ photos were morphed into obscene images and shared on social media platforms, pressuring them into repayment. In others, borrowers were forced to take out new loans to repay existing ones, trapping them in a cycle of debt.