Indian law enforcement agency Enforcement Directorate (ED) has frozen around Rs 46.67 crore in various bank accounts and virtual accounts of payment gateways - PayTM, Easebuzz, Razorpay and Cashfree - following the searches in connection with the Chinese loan app case.
The investigation agency, in a statement, said: “Rs 33.36 crore was found with Easebuzz Private Limited (Pune), Rs 8.21 crore with Razorpay Software Private Limited (Bangalore), Rs 1.28 crore with Cashfree Payments India Private Limited (Bangalore) and Rs 1.11 crore with Paytm Payments Services Limited (New Delhi). A total amount of around Rs 46.67 crore was detected and frozen in various bank accounts and virtual accounts.”
The ED officials, on September 14, conducted searches at six locations in Delhi, Mumbai, Uttar Pradesh’s Ghaziabad and Lucknow and Bihar’s Gaya. The economic intelligence agency, in connection with a money laundering case lodged against an app-based token named HPZ and its related entities, has also searched 16 other premises of PayTM, Easebuzz, Razorpay and Cashfree in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore.
The agency initiated a money laundering investigation based on FIR filed by Nagaland Police in 2021. ED officials also revealed during the probe they found that huge balances were maintained in the virtual accounts of the entities involved with payment aggregators.
Moreover, EaseBuzz spokesperson, in a statement, said: “We, at Easebuzz, would like to clarify that none of the parties mentioned in the ED’s statement belonged to our merchant base. The mentioned entities by authorities were only the counterparties of the merchant, who was using our payment gateway and this merchant had been proactively identified and blocked by us much before the investigation had started, as per our internal risk and compliance process. We intend to fully co-operate with the investigation authorities, as we are committed to ensure that our business operations comply with the existing regulations.”
Cashfree Payments’ spokesperson, in a statement, stated: “We continue to extend our diligent co-operation to the ED operations. We were able to provide the required and necessary information within a few hours on the day of enquiry. The operations and on-boarding processes of Cashfree Payments are fully compliant with existing regulations.”
Razorpay Spokesperson, in a statement, said: "With regards to the ongoing investigation against a few suspicious entities who conducted illegal business through multiple payment gateways/banks about 1.5 years ago, we proactively blocked all those suspicious entities and funds associated with them, and have shared their details with authorities. None of the funds which have been directed to be frozen by the authorities belong to Razorpay. As mentioned earlier, we will continue to provide necessary information to authorities to assist in this investigation. We would like to reiterate that all our operations and on-boarding processes adhere to the highest standards of governance & regulatory guidelines."
The investigation agency has also conducted searches at offices of crypto firm HPZ token, an app-based token which promised users of large gains against investment by investing in mining machines for Bitcoin and other cryptocurrencies, because of its alleged connection to Chinese loan apps.
The ED further added that “Investigation revealed that the HPZ token was operated by Lillion Technocab Private Ltd and Shigoo Technology Private Limited. Shigoo Technology Private Limited was also found linked to various Chinese-controlled companies. It was also revealed that various other companies were indulged in receiving funds from public on pretext of operating various apps, websites for gaming, loan and others.”
The fraudsters’ modus-operandi was to first lure the victims to invest in the company on the pretext of doubling their investment through the app HPZ Token, which received payments from users through UPI and other payment gateways.
However, before the alleged fraudsters stopped the payments and the website became inaccessible, they initially paid back the part amount to the investors. But later, the remaining amount was allegedly diverted to various company and individual accounts through various payment gateways and banks, where partly it was siphoned off in virtual currencies.
CoinSwitch Kuber was also probed and searches were conducted at five premises linked to the crypto exchange. However, Ashish Singhal, co-founder of CoinSwitch Kuber, denied that the investigation was due to money laundering. The probe agency also suspects the involvement of the Gurugram-based Jilian Consultants India Private Limited behind various companies involved in these frauds.
Another such entity, Mad-Elephant Network Technology Private Limited, in agreement with X10 Financial Services Limited, was allegedly operating various loan apps such as Yo-Yo cash, Tufan Rupees and Coco Cash. “Similarly, Su Hui Technology Private Limited, in agreement with Nimisha Finance India Private Limited had operated Loan Apps,” the agency revealed.
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