Investigators in India are facing difficulties in cracking down on overseas gaming and betting apps that evade taxes by converting earnings into cryptocurrency. One of the major networks currently being investigated is Parimatch, a Cyprus-based group that advertises during local sports leagues. The Directorate General of Goods and Services Tax Intelligence (DGGI) recently exposed one of the hundreds of networks operating in India for Parimatch. The network collected โน700 crore from Indian users of gaming apps and funneled it out by converting it into cryptocurrency. To avoid legal action, these gaming companies, based in tax havens and operating illegally in India, establish multiple layers of communication and transactions that span across international jurisdictions, often using Dubai as a transit point for funds flowing through cryptocurrency.
DGGI officials arrested the director of an unlicensed payment aggregator that collected money in the accounts of shell companies from users of Parimatchโs gaming and betting services. The funds were then transferred from the payment aggregator to the bank accounts of shell companies. However, a large portion of the funds had already been moved out of banks and converted into cryptocurrency. The agency apprehended a crypto exchange operator in Mumbai who was handling one set of shell companies operated by dummy directors. The crypto operator revealed that โน96 crore collected from app users had been converted into cryptocurrency. Unfortunately, the investigation reached a dead end as the accused had no knowledge of the owner of the wallet to which he transferred the cryptocurrencies. The dummy directors of the shell companies claimed ignorance of the amounts credited to their accounts and to whom the funds were transferred.
The DGGI also discovered funds transferred to shell companies based in Kolkata. However, the person responsible for handling these shell companies is suspected to have fled the country. During the investigation, it was found that Parimatch had used celebrity endorsements in advertisements during live broadcasts of local sports leagues. Media management companies received instructions from Parimatch via email to hire celebrities for the ads.
The Enforcement Directorate (ED) is currently investigating numerous gaming and betting companies, many of which operate using shell companies registered abroad in tax havens. These companies have no physical presence in India and communicate only through email, phone calls, or anonymous intermediaries. The Union Ministry of Home Affairs has been informed of this trend in order to consider imposing restrictions on such apps and websites for national security reasons. Although there are advanced tools available to track cryptocurrency movements, interoperability between blockchains makes it difficult to trace the movement of cryptocurrency in this case.
(Source: Original article has been rewritten and reformatted for clarity)
