India seizes $286 million in crypto assets and arrests the founder of the OctaFX Ponzi scheme

Key points:

• India’s ED seized $286 million in cryptocurrency and arrested Spanish citizen Pavel Prozorov, accused of organizing the OctaFX Ponzi scheme.
• OctaFX defrauded investors by posing as a legitimate currency and cryptocurrency trading platform and transferring funds to offshore companies.
• The ED is working with international authorities to identify all participants in the scheme, which spanned dozens of countries and caused hundreds of millions of dollars in losses.

India’s Enforcement Directorate (ED) seized approximately $286 million in cryptocurrency and arrested Spanish citizen Pavel Prozorov. He is accused of running the OctaFX Ponzi scheme. The operation was one of India’s largest anti-money laundering (AML) and unauthorized Forex trading operations targeting Indian investors.

The ED confirmed that the preliminary arrest warrant was issued in accordance with the Prevention of Money Laundering Act (PMLA). Spanish authorities detained Pavel Prozorov following an international request, citing his role in cybercrimes related to the OctaFX network.

According to the investigation, the platform posed as a legitimate currency and cryptocurrency trading service without the permission of the Reserve Bank of India (RBI). Investors were promised high returns from currency and cryptocurrency trading, but in reality, the funds were transferred offshore.

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OctaFX: the scheme and geography of fraud

Investigators found that OctaFX stole about $225 million from Indian investors between July 2022 and April 2023. Total profits in India alone from 2019 to 2024 amounted to more than $600 million.

The Department of Justice said OctaFX used a Ponzi scheme. Early investors received small profits to gain trust, while new investors’ funds were used to maintain payments and expand the strategy. The fraud affected thousands of people in several cities in India, and the funds were traced to accounts in several countries.

Investigators uncovered a complex network of international organizations used to disguise and move the stolen funds:

• companies in the British Virgin Islands were engaged in marketing;
• in Spain, they managed servers and back-office operations;
• in Estonia, they processed payments;
• in Georgia, they provided technical support;
• in Dubai, Russian citizens oversaw operations in India.

The investigation is ongoing: authorities are tracking offshore accounts and assets linked to the OctaFX network. The ED said it is cooperating with foreign agencies to identify additional beneficiaries and partners involved in money laundering through the global cryptocurrency system.

Recently, India’s FIU sent notices to 25 offshore crypto exchanges for violating AML requirements and failing to register in accordance with the PMLA. The authorities have ordered internet providers and app stores to block access to these platforms.