New Delhi: The Spanish Police have arrested a Russian national, wanted globally and in India for a multi-crore investment fraud, Enforcement Directorate officials revealed Friday. He has duped thousands across the world with his OctFx investment app; profiting about Rs 5,000 crore from India alone in the past five years.
India has charged OctFX founder Pavel Prozorov under the Prevention of Money Laundering Act (PMLA), after investigations against him began in 2022.
Once a trading partner of the Indian Premier League (IPL) franchise Delhi Capitals, OctaFx was also endorsed by television stars such as Krystle Dsouza and Karan Wahi. They have both been questioned by the Enforcement Directorate.
ED sources said that the arrest in Spain was carried out after India shared inputs with the Spanish government under the Mutual Legal Assistance Treaty (MLAT). There were also inputs from other countries like Singapore and Cyprus, where the app was duping thousands of investors, said sources.
“Almost all countries where the platform was in operation carried out their probe after the ED started the probe and unearthed the modus operandi behind it,” an ED official said. “Attachments (of property) were done in Spain, and we have been in contact with them (Spanish authorities) over the case. Now the work would begin for the ultimate objective of his extradition to India,” the official said.
However, he conceded the road ahead for the process would be long and complicated.
For the ED to pursue extradition with the Ministry of Home Affairs and the Ministry of External Affairs, it needs a non-bailable warrant from the PMLA special court dealing with the money laundering case.
ED’s probe into OctaFX and Prozorov
ED’s investigation began in 2022, based on a case filed by the Pune Police, which involved small-time investors who had complained of large-scale cheating through the application.
In its probe, the agency found that the system was consistently stacked against investors, as OctaFX operations manipulated transactions through financial tactics, including frequent slippage and excessive leverage. In trading, slippage is the difference between the price at which a trade is attempted and the price at which traders execute the transaction, while leverage is a process of borrowing money from brokers while trading.
Later, the agency allegedly found that money defrauded from investors was routed from the primary account to several e-wallets or accounts, opened using fake documents or dummy entities during the initial process of layering illicit money (creating a complex web of financial transactions to obscure the origin of illegally obtained funds).
The agency found that OctaFX duped Indian investors of Rs 1,875 crore in less than a year, between July 2022 and April 2023, generating profits of around Rs 800 crore. “Considering the company’s operations from 2019 to 2024, total profits from India are estimated to exceed Rs 5,000 crore, much of which has been illicitly transferred overseas,” an agency spokesman said Friday.
In its prosecution complaint, the agency has alleged that funds from India were siphoned out disguised as payment for services to entities controlled by Prozorov across Spain, Estonia, Russia, Hong Kong, Singapore, the UAE, and the UK.
“The probe revealed that marketing activities were handled by entities in the British Virgin Islands (BVI); entities/persons in Spain hosted servers and back-office operations; entities in Estonia managed payment gateways; entities in Georgia provided technical support; entity in Cyprus served as the holding company for the Indian entity; entities/persons in Dubai oversaw Indian operations via Russian promoters; and entities in Singapore facilitated the export of bogus services to launder funds abroad,” the agency spokesman further said Friday.
The agency found that Prozorov exploited regulatory loopholes and established dummy entities in India to manipulate records, allowing funds to be transferred overseas without raising suspicion. He also directed promotional campaigns targeting Indian investors, including celebrity endorsements and sponsorships, to integrate OctaFX in the market,” the agency has alleged in its complaint.
“His actions constituted careful layering, placement, and integration of laundered funds as Foreign Direct Investment (FDI), misrepresenting their origins. Despite multiple summons from the ED, Prozorov evaded compliance, indicating deliberate obstruction of legal processes,” the agency submitted in the complaint.
The agency so far has attached properties worth over Rs 2,681 crore, including 19 immovable properties and a luxury yacht in Spain owned by Pavel Prozorov.
(Edited by Viny Mishra)