Enforcement Directorate Arrests Armstrong Exchange Founder in Betting Scam Probe

The Enforcement Directorate (ED) has arrested Sagar Dash, founder of Armstrong Exchange, following an investigation into an alleged online gaming and betting scam. Dash was taken into custody on October 27 under the Prevention of Money Laundering Act (PMLA), 2002, and a special PMLA court in Mumbai has remanded him to three days of agency custody.

Key Takeaways

• The arrest: Sagar Dash was detained on October 27 under the PMLA following investigations into online betting and cyber fraud.
• Court action: A special PMLA court in Mumbai granted the ED three days of custody to continue questioning the founder.
• Financial network: Investigators uncovered a system involving mule accounts and shell entities used to route proceeds of crime worth hundreds of crores.
• Document fabrication: The ED alleges Dash used falsified KYC documents to open a cryptocurrency account at the Nagarbhavi Credit Cooperative Society.
• Broader crackdown: The operation is part of a larger ongoing investigation into illicit financial flows, including recent actions against other fintech and crypto platforms.

Investigation Details

The probe began after three First Information Reports (FIRs) were filed regarding cyber fraud and online betting involving the All Panel Exchange (APX). The ED subsequently examined APX operations and related transactions, which led to the discovery of a network used to launder money. According to the agency, funds were initially routed through mule accounts at the Jubilee Hills Mercantile Cooperative Bank in Hyderabad before moving to shell entities.

The ED states that significant portions of these funds reached a nodal account at the Nagarbhavi Credit Cooperative Society in Bengaluru. The agency claims this account was maintained by Armstrong Exchange Pvt Ltd, a company established by Dash. Searches conducted by the ED across cities including Pune, Mumbai, Bengaluru, Hyderabad, and Surat resulted in the seizure of documents and the freezing of approximately ₹9 crore in various bank accounts.