The Enforcement Directorate (ED) has arrested one of the prime accused in the Rs 1,200 crore fake cryptocurrency racket busted by the agency in January this year.

Abdul Gafoor, a resident of Malappuram, has been remanded in judicial custody by a PMLA (Prevention of Money Laundering Act) court in Kozhikode. The central agency would on Monday move court seeking his custody for interrogation, the Indian Express reported, citing ED sources.

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Gafoor is the director of an inactive firm (shell company), Stox Global Brokers Private Limited, based in Malappuram. The ED alleged he had been involved in siphoning money from people who were lured with fake crypto investment offers, and then parking the money in shell companies.

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The ED had earlier identified K Nishad, who had fled the country after the racket was busted, as the mastermind behind the scam that allegedly duped around 900 investors. Eventually, the agency attached his properties in Malappuram.

Last year, the case was referred to the ED after Nishad and others were charged with several cases by the police in Kannur and Malappuram districts under Section 420 (Cheating) of the IPC as well as the Prize Chits and Money Circulation Schemes (Banning) Act.

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According to Indian Express, the scam allegedly occurred in 2020, mostly during the Covid lockdown. The alleged victims were forced to buy a non-existent cryptocurrency “Morris Coin”, listed with a Coimbatore-based cryptocurrency exchange known as ‘Franc Exchange’ in a method similar to an initial public offering purchase.

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The scam was carried out with 10 Morris coins valued at Rs 15,000, with a lock-in period of 300 days. The investors were issued an e-wallet and were told the coin value would surge when traded on the exchange.

According to the Indian Express, the promoters of the coin allegedly siphoned the money and invested in real estate in Kerala, Tamil Nadu and Karnataka without disclosing any source of income.