How money laundering probe led to seizure of Tk45cr cryptocurrency

Highlights:

• $3.7m worth USDT seized linked to trading app MTFE
• USDT is a cryptocurrency stablecoin pegged to USD
• CID took support from law enforcement units and US embassy
• MTFE used a multi-level marketing model, offering high returns
• Expert says freezing accounts does not guarantee fund recovery

The Criminal Investigation Department (CID) has seized $3.7 million (Tk45 crore) in cryptocurrency as part of an ongoing investigation into money laundering through Metaverse Foreign Exchange (MTFE), a Dubai-based trading app.

In response to a request from CID, virtual exchange platform OKX froze USDT, a type of cryptocurrency known as stablecoin, said Sub-Inspector (SI) Atiqur Rahman of CID's Cyber Police Centre (CPC).  

The seized virtual assets were part of illicit transactions linked to MTFE.

Following complaints from victims, an investigation was launched by multiple law enforcement units. CID sought legal permission from Bangladesh courts and submitted a request to OKX, which ultimately led to the seizure of MTFE's virtual currency, according to the officer.

The US embassy also assisted in the process, he said, adding that once legal proceedings are concluded, these funds may be repatriated.

However, BM Moinul Hossain, professor and director at the Institute of Information Technology at Dhaka University, said freezing an account does not guarantee the return of the funds.  

"Cryptocurrency platforms may freeze accounts when there is an allegation of illegal transactions or money laundering, but they will not transfer the funds until 100% verification of evidence is completed."

He further stated that in Bangladesh, the challenge lies in identifying those responsible for money laundering and proving that the transactions are unlawful under clear legal frameworks.  

Besides, recovery largely depends on the policies of the exchange platforms involved, said the professor.  "These cryptocurrency businesses are generally focused on safeguarding the interests of their clients."

The MTFE platform has been allegedly used in financial fraud in Bangladesh and several other countries. In August 2023, it reportedly vanished with around $1 billion (Tk11,000 crore), with about 90% of the total funds belonging to Bangladeshi investors.  

The platform operated on a multi-level marketing model, promising high returns to investors. It lured participants with claims that a small investment could secure a position as a company CEO, alongside daily profits that could double or triple their investments.  

The scheme required investors to conduct trades via foreign applications, enticing thousands of individuals to invest large sums. The company's founder, Masud Al Islam, remains at large abroad.  

A case related to this scam was filed on 23 July 2023 in Rajshahi. After a joint investigation, five individuals were arrested in connection with the case. However, law enforcement agencies have yet to report substantial progress on the case.  

Shah Alam, the investigating officer from Rajpara Police Station in Rajshahi, stated on Saturday evening, "The case is still under investigation."  

Mohammad Maruf Rahman Mahim, a resident of Khilgaon, Dhaka, was among the many who fell victim to MTFE's scheme: "I had a family connection with MTFE ambassador Mubashsirul Ibad, who is now on the run. Trusting him, my family and I invested nearly Tk1 lakh, only to be deceived."  

Mahim filed a case with Khilgaon Police Station, which was later transferred to CID. However, he claims that there has been no update on recovering his lost investment or apprehending the perpetrators.  

Investigating Officer Sub-Inspector Tarikul Islam commented, "Even those accused in this case were, in many instances, victims themselves. They collected money from investors and passed it on to senior-level operators within the scam."