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Paytm, Razorpay and Easebuzz have denied reports that claimed that the Enforcement Directorate (ED) was probing them in connection with a scam linked to the HPZ Token app
Earlier, it was reported that ED froze about INR 500 Cr kept in virtual accounts of Paytm, Razorpay, PayU, Easebuzz and four other payment gateways
The move was part of an ongoing investigation into a crypto scam worth INR 2,200 Cr linked to HPZ Token app
Fintech giant Paytm, IPO-bound Razorpay and B2B fintech startup Easebuzz have denied reports that claimed that the Enforcement Directorate (ED) was probing them in connection with a scam linked to the HPZ Token app.
The Times of India reported on Friday (January 24) that ED has frozen about INR 500 Cr kept in virtual accounts of Paytm, Razorpay, PayU, Easebuzz and four other payment gateways over the last two years as part of its probe into the HPZ Token crypto scam.
Through the pan-India scheme spanning 20 states, fraudsters duped the public of INR 2,200 Cr on the false promise of phenomenal returns on investment for mining cryptocurrencies, including bitcoins, through the HPZ Token app, said the report.
These funds were being illegally transferred out of India by some Chinese nationals, a part of which was seized by ED. The proceeds remained with the gateways for a day or two during which ED seized around INR 500 Cr.
Of the alleged “proceeds of crime” linked to the HPZ Token scam, ED froze INR 130 Cr in virtual accounts held with PayU, followed by INR 33.4 Cr with Easebuzz, INR 18 Cr with Razorpay, INR 10.6 Cr with CashFree and INR 2.8 Cr with Paytm.
Other payment gateways currently being investigated by ED include WunderBaked, AgreePay and SpeedPay.
In a filing with exchanges, Paytm issued a clarification, saying it has not received any new notice or query from ED in connection with the probe, refuting media reports as “misleading.”
In a separate statement, a Razorpay spokesperson said that the IPO-bound company did not receive any new notices, communications, or inquiries from ED in the case.
Meanwhile, Easebuzz said ED’s probe into the HPZ Token scam case has no direct connection to the company. It also said that it has not received any communication from the authorities on the matter.
It is pertinent to note that ED launched a money laundering probe into the matter based on a first information report (FIR) filed by the cyber crime police of Nagaland’s Kohima in October 2021 against the HPZ Token app and others linked to the scam.
An investigation by the ED sleuths revealed that some China-linked entities entered into service agreements with several NBFCs and were allegedly operating multiple suspicious online lending apps such as Cashhome, Cashmart and easyloan.
These apps were then used to rotate and layer the funds fraudulently received for illegal online gaming, betting and investments for Bitcoin mining.
The app promised returns of as much as INR 4,000 per day for three months on an investment of INR 57,000.
As of May 2024, the ED had frozen assets worth INR 177 Cr, including INR 56 Cr in bank accounts held by various shell and Chinese-linked entities in connection with the HPZ Token scam case.
In October last year, actor Tamannaah Bhatia was grilled by ED for hours in connection with the HPZ Token scam. The actor has made a “celebrity appearance” at an event of the company in exchange for cash.
The development comes as ED intensifies its crackdown against China-linked digital lending apps for alleged violations of the country’s money laundering and foreign exchange management laws.
In the previous such instance, the agency raided offices of fintech players of Paytm, Razorpay, Easebuzz, Cashfree Payments India, among others.
Last year, Saurabh Chandrakar, the alleged kingpin in the scam linked to online betting platform Mahadev Book, was arrested in the UAE on money laundering charges. Hacked crypto exchange WazirX is also currently under investigation by multiple government agencies, including the Financial Intelligence Unit and Intelligence Bureau, in connection with a $235 Mn hack it suffered last year.
Editors Note: The article has been updated to include statements from Paytm, Razorpay and Easebuzz.