SUMMARY
The frozen amount belonged to various Chinese-controlled entities that lured users with promises of high returns on their crypto investments
Earlier this month, the ED froze INR 46.67 Cr associated with various Chinese entities in the same case
Of late, the ED has stepped up its actions on Chinese digital lending apps for allegedly flouting money laundering and foreign exchange management laws
The Enforcement Directorate on Thursday (September 29) said it carried out a search operation in connection with a probe into app-based token HPZ and other similar apps.
As part of the crackdown, account balances totalling INR 9.82 Cr belonging to various Chinese-controlled entities and parked with various payment gateways were frozen during the process.
Comein Network Technology Private Limited, Mobicred Technology Private Limited, Magic Data Technology Private Limited, Baitu Technology Private Limited, Aliyeye Network Technology India Private Limited, Wecash Technology Private Limited, Larting Private Limited, Magic Bird Technology Private Limited, and Acepearl Services Private Limited were among the companies targeted in the operation.
“Directorate of Enforcement has carried out search operation and freezed account balances of INR 9.82 Cr of various Chinese controlled entities…maintained with payment gateways, in respect of an investigation relating to the misuse of App-based token named “HPZ” and other similar applications by several entities,” the agency said in a statement.
Earlier this month, the ED froze INR 46.67 Cr associated with various Chinese entities in the same case. With this, the total haul in the case currently stands at INR 56.49 Cr. Further probe into the case is currently underway.
Investigation into the matter revealed that the companies in question operated in agreement with various non banking financial companies (NBFCs) and received funds from the public via apps such as Cashhome, Cashmart and easyloan.
The Modus Operandi
The probe involved HPZ token which was used to lure unsuspecting users. It promised high returns to users who were told that the money would be invested in mining machines for Bitcoin and other cryptocurrencies. Subsequently, the money was diverted to individual and company accounts of the erring entities.
Eventually, the money transferred to entities would be syphoned off using digital currencies and the website would become inaccessible.
Of late, the ED has stepped up its action on Chinese digital lending apps for allegedly flouting money laundering and foreign exchange management laws.
In the previous instance, offices of major payment gateways and other fintech players including Pune-based Easebuzz, Razorpay, Cashfree Payments India, and Paytm were raided.
Close on the heels of that, the agency’s sleuths also swooped down on three premises linked to gaming top-up platform Coda Payments India in connection with a money laundering probe. On Wednesday, Bitcoins worth INR 12.83 Cr were frozen by ED in connection with a money laundering probe involving a gaming app called E-nuggets.
Last month, cryptocurrency exchange WazirX faced the ire of the ED and its bank assets worth INR 64.67 Cr were frozen in a money laundering probe. Earlier this month, the crypto exchange said that the agency had unfrozen its bank accounts.
The ED is currently investigating multiple crypto exchanges in the country as part of its probe into illegal digital lending apps.
