4 hours Ago By Sharveya Parasnis
Explainer Briefly Slides The Enforcement Directorate (ED) has arrested 2 Chinese nationals under provisions of the Prevention of Money Laundering Act (PMLA), a press release on November 19 said. The individuals, Ya Mao and Wu Yuanlun, were part of a scheme which disbursed short-term loans through various apps alongside an “exorbitant rate of interest.” The lenders then recollected the loans by harassing and blackmailing the borrowers and sent the proceeds abroad through cryptocurrencies.
The scheme had managed to lend and recollect Rs. 49.2 crore so far, stated the ED.
The Principal Sessions Court of Chennai has since remanded the two individuals to judicial custody till November 29. How Did It Work? The individuals had established two companies – Toucolor Technologies and Truekindle Technology, where they forced Indian employees to act as dummy directors while maintaining full control of operations. They then created mobile apps targeting financially desperate Indians, offering quick loans between 5,000-10,000 rupees.
The apps required users to grant a number of permissions, including photos, contact lists, and other private data. The lenders also took 20-30% of each loan amount as “processing fees” and charged exploitative interest rates, giving borrowers only 7-15 days to repay. When borrowers failed to pay back the loan, the lenders launched aggressive harassment campaigns that involved verbally abusing and threatening borrowers alongside their friends and family.
They also created created fake obscene images of borrowers and threatened to share them online. Borrowers were further pressured to take new loans from other apps to pay existing ones, trapping them in a cycle of debt. The criminals allegedly used the Indian dummy directors’ identities to create accounts on WazirX, the cryptocurrency exchange.
They brought in Rs. 3.54 crore through the exchange between August-December 2020, converted it to Indian rupees for lending and then collected Rs.
5.02 crore from harassed borrowers. The lenders converted the collections back into cryptocurrencies, which unknown parties then accessed from Hong Kong.
Background: There have been a number of reports over the past few years, regarding loan apps that charged exorbitant interest and even threatened borrowers over repayment. Medianama had previously covered the tactics used by these apps here . In 2022, the ED raided the offices of Cashfree, RazorPay and PayTM in connection with these apps.
The government also blocked 138 betting apps and 94 loan lending apps over alleged Chinese links. Also Read:.
