Gulnara Karimova, who combined careers as a pop star, fashion designer and head of charitable foundations, was once seen as a potential successor to her 76-year-old father, who has ruled Uzbekistan since before the fall of the USSR.
But that all changed last year when she disappeared from the public eye after openly criticising key officials on Twitter.
On Monday the Uzbek general prosecutor's office said that a woman named only as "G Karimova" was a member of a "criminal group" and was being investigated. The prosecutors did not provide further details.
"G Karimova, mentioned in the statement is Gulnara, the Uzbek president's eldest daughter -- this is for sure," the activist told AFP on condition of anonymity.
"And it is 100-per cent logical, as the whole case which started early this year was against Gulnara."
In July, an Uzbek military tribunal handed down hefty jail terms to over a dozen people believed to be associates of Gulnara Karimova, including the man thought to be her long-term boyfriend, Rustam Madumarov.
They were found guilty of fraud, illegal currency transactions, money laundering and tax evasion.
"Obviously, authorities want to shed light on what is going on around Gulnara," the activist said.
"We would not have known the whole case if she was not part of it."
In an ominous foretelling, the prosecutor's office predicted no one would escape punishment following its probe.
"The strict observance of the principle of inevitability of punishment will be applied towards every member of the organised crime group following the results of the investigation," it said.
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