High-Stakes Heist: Inside the INR 12.5 Cr CRED Fraud and Arrests

CRED Fraud Case: Four Arrested in INR 12.5 Cr Embezzlement

The Bengaluru police have arrested four individuals from Gujarat, including an Axis Bank manager, in connection with the embezzlement of INR 12.5 crore from Dreamplug Paytech Solutions, the parent company of fintech unicorn CRED.

The suspects have been identified as:

1. Vaibhav Pithadiya: A relationship manager with Axis Bank in Rajkot, alleged mastermind.
2. Parmar Neha Ben Vipulbhai: A banking agent from Surat.
3. Shailesh: An insurance agent from Rajkot.
4. Shubham: A commission agent from Rajkot.

Details of the Fraud

The fraud was uncovered on November 13, 2024, when Dreamplug executives noticed suspicious transactions in two Axis Bank accounts held at the bank’s Indiranagar branch in Bengaluru.

Modus Operandi:

1. Insider Knowledge:
   • Vaibhav Pithadiya allegedly exploited his access to sensitive banking systems to facilitate the crime.
2. Forged Documents:
   • The accused fabricated documents, including:
     • Fake board resolutions.
     • Fraudulent seals and signatures.
   • These were used to manipulate account credentials and bypass security measures.
3. Fraudulent Transactions:
   • The group executed 37 transactions between October 23 and November 11 to siphon off funds.
   • Over a dozen mule accounts were opened to launder the stolen money.
4. Stolen Funds:
   • Police have so far recovered INR 1.83 crore, and efforts are ongoing to retrieve the remaining amount.

How CRED Responded

According to sources, CRED user data was not compromised during the attack. However, the company has not issued an official comment on the matter.

A complaint was filed by Narasimha Vasanth Sastry, an executive at CRED, prompting the investigation.

Broader Context

The incident highlights vulnerabilities in corporate banking systems and the need for stricter internal checks. It is not the first case of embezzlement to hit new-age tech companies this year:

1. Swiggy Fraud Case (October 2024):
   • A former employee allegedly embezzled INR 33 crore from the B2B arm Scootsy Logistics.
2. BharatPe Misappropriation Case (September 2024):
   • Deepak Gupta, the brother-in-law of BharatPe cofounder Ashneer Grover, was arrested for allegedly siphoning off company funds.

About CRED

Founded in 2018 by Kunal Shah, CRED initially focused on providing rewards to premium credit card users for timely bill payments. Over the years, the company has evolved into a super app, expanding its services to include:

1. Vehicle Insurance:
   • Launched through CRED Garage in partnership with three insurance companies.
2. Monetizing User Base:
   • Diversified offerings to generate additional revenue streams.

The INR 12.5 crore fraud underscores the importance of robust security protocols in corporate banking and fintech platforms. While the Bengaluru police have made significant progress in recovering funds, the case serves as a cautionary tale for companies operating in the fast-paced world of fintech, where the stakes and risks are equally high.