After WazirX, ED freezes Rs 370 Cr assets of crypto exchange Vauld
ED stumbled upon the alleged illegal activities of the company during its ongoing money laundering probe against some dubious smartphone-based loan lending apps, which are stated to be "backed by" Chinese funds.
Enforcement Directorate (ED) on Friday attached Rs 370 crore worth deposits—invested in banks, payment gateway, and crypto accounts—of Flipvolt Technologies after it conducted searches at various premises of Yellow Tune Technologies Pvt. Ltd. in Bengaluru over the past three days.
Flipvolt Technologies is the India-registered entity of Vauld, a Singapore-based crypto lending platform.
The agency stumbled upon the alleged illegal activities of the company during its ongoing money laundering probe against some dubious smartphone-based loan lending apps, which are stated to be "backed by" Chinese funds.
These apps, according to the ED, soon shut shop and "diverted" their profits.
ED said, "While doing fund trail investigation, ED found that deposits to the tune of Rs 370 crore were deposited by 23 entities, including accused NBFCs (non-banking financial companies) and their fintech companies, into the wallets of Yellow Tune Technologies Pvt. Ltd. held with crypto exchange Flipvolt Technologies Private Limited."
"These amounts were nothing but proceeds of crime derived from predatory lending practices," the agency said in a statement.
It said cryptocurrency, so purchased, was transferred to various unknown foreign wallet addresses.
The agency said it raided the company (Yellow Tune) to locate its "beneficial owners" and that of the recipient wallets.
"But the company's promoters are untraceable. It is found that this shell entity was incorporated by Chinese nationals Alex and Kaidi (real names not known) with the active connivance of willing CAs (chartered accountants) and CSs (company secretaries) and the bank accounts were opened in the name of dummy directors," it said.
"These Chinese nationals left India during December 2020, and later, the bank internet credentials and digital signatures of dummy directors were shipped abroad and used by the said Chinese nationals to "launder the proceeds of crime," ED added.
It said Yellow Tune, with assistance from Flipvolt crypto exchange, which has "very lax KYC norms, no EDD (extended due diligence) mechanism, no check on the source of funds of the depositor, and no mechanism of raising STRs (suspicious transaction reports) assisted the accused fintech companies in avoiding regular banking channels, and managed to easily take out all the fraud money in the form of crypto assets."
The agency said despite giving repeated opportunities, Flipvolt crypto exchange "failed" to give the complete trail of crypto transactions made by Yellow Tune Technologies, and it has frozen assets from its India entity till it provides a complete fund trail.
Earlier on July 4, Vauld had suspended all withdrawals, trading, and deposits on its platform due to “financial challenges”.
The crypto exchange platform filed a petition on July 8 seeking a moratorium order and requested a six-month moratorium for its parent company, Defi Payment Limited, in the Singapore High Court. The court had granted three-month protection from creditors.
On August 11, ED said it is investigating ten different cryptocurrency exchanges in India for allegedly laundering money. Earlier this month, the agency froze bank deposits of Rs 64.67 crore of cryptocurrency exchange .
In July, crypto exchanges, including , , and Unocoin, were served notices by the ED as part of its ongoing investigation into alleged instances of foreign exchange violations.
(With inputs from PTI)
Edited by Suman Singh