The Enforcement Directorate (ED), Mumbai Zonal Office, filed a third supplementary charge sheet on 1 October 2026 against Mehmood Abdul Samad Bhagad, alias Challenger King, before the Special Court (PMLA), Mumbai, under the Prevention of Money Laundering Act (PMLA), 2002. The charge sheet alleges his central role in an organised syndicate that exploited stolen identities to operate a network of mule bank accounts, funnelling proceeds from cyber fraud, illegal online gaming, and betting activities.

How the Fraud Was Structured

According to the ED, the accused directed associates to establish shell entities and open multiple bank accounts that collectively received more than ₹157 crore. The funds were then layered through successive shell-entity accounts under Bhagad's control, after which hundreds of crores were withdrawn by co-accused and routed through hawala channels to other locations.

The agency's probe was initiated on the basis of an FIR first registered at Malegaon Chhawani Police Station in Nashik and subsequently re-registered by the Anti-Terrorism Squad (ATS), Maharashtra. At the centre of the case is the deposit of more than ₹100 crore into freshly opened accounts at the Nashik Merchant Co-operative Bank (NAMCO Bank) in Malegaon.

Crypto Laundering Via USDT

The ED has detailed a cryptocurrency-based laundering mechanism as a key plank of the operation. Bhagad and his associates allegedly traded in USDT (Tether), selling the stablecoin to individuals engaged in cyber fraud and illegal online gaming. In return, those buyers deposited Indian rupees into mule accounts controlled by Bhagad, effectively converting illicit digital assets into cash within India's banking system.

This is a pattern investigators have increasingly flagged in crypto-linked money laundering cases — using stablecoins as an intermediary layer to obscure the trail between criminal proceeds and usable cash.

Searches, Seizures and Arrests

Earlier searches carried out by the ED at premises in Surat, Malegaon, Ahmedabad, and Mumbai resulted in the recovery of incriminating documents, seizure of approximately ₹15 crore in cash, and the freezing of ₹34 crore across multiple bank accounts. A provisional attachment order was additionally issued for movable and immovable properties valued at ₹95 lakh.

To date, the ED has arrested six persons in connection with the case. The agency has filed one prosecution complaint and two supplementary complaints prior to the latest charge sheet, and the Special Court (PMLA) has taken cognisance of all three earlier filings.

Where the Investigation Stands

The ED stated that further investigation remains in progress, with the agency focused on tracing and dismantling what it describes as an illicit financial network. The third supplementary charge sheet signals that investigators continue to uncover fresh material even as earlier complaints are being heard by the court. With six arrests already made and significant assets frozen, the case represents one of the larger crypto-linked fraud prosecutions currently before a PMLA court in Maharashtra.