CHENNAI: The Enforcement Directorate (ED) arrested two Chinese nationals, Xiao Ya Mao and Wu Yuanlun, on November 13 from Tiruchirappalli (Tiruchy), Tamil Nadu, in connection with a case involving digital loan apps. These apps, allegedly operated by Chinese nationals, provided high-interest short-term loans through various mobile applications. The arrests were made under the provisions of the Prevention of Money Laundering Act (PMLA), with the Sessions Court in Chennai remanding the suspects to judicial custody until November 29.
The investigation was initiated after complaints regarding loan apps charging exorbitant interest rates, processing fees of 20%-30%, and using threatening tactics to recover loans. The ED’s probe revealed that the arrested individuals had established two companies—Toucolor Technologies Private Limited and Truekindle Technology Private Limited—in 2020. They used dummy directors to front these operations while they managed everything behind the scenes.
The companies offered micro-loans ranging from Rs 5,000 to Rs 10,000 through mobile apps, requiring borrowers to share personal, bank, and contact details. Borrowers unable to repay were forced to take new loans, thus entangling them in a debt trap. The ED found that these companies disbursed loans totaling Rs 49.2 crore, using aggressive tactics to recover funds, including harassment of borrowers and their families.
Additionally, the ED uncovered that the Chinese nationals used cryptocurrency wallets to transfer and launder money. They created wallets on the WazirX platform using dummy director identities and funneled Rs 3.54 crore through these wallets between August and December 2020. The funds were later withdrawn as cash, with IP logs showing that the wallets were accessed from Hong Kong. The proceeds were ultimately siphoned out of India, further complicating the financial trail.
