Tightening the scrutiny on the Chinese-controlled loan apps and investment tokens, the Enforcement Directorate has frozen Rs 46.67 crore worth funds kept in payment gateways including Paytm, Easebuzz, Razorpay, and Cashfree.
The action taken under the Prevention of Money Laundering Act (PMLA) came after the ED conducted searches against Chinese-controlled loan apps and investment tokens on September 14 at various locations, including in Delhi, Mumbai, Ghaziabad, Lucknow and Gaya.
Sixteen premises of banks and payment gateways in Delhi, Gurugram, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bengaluru in respect of an investigation related to an app-based token named HPZ and related entities were also covered, the federal agency said in a statement.
The money laundering case stems from an October, 2021 FIR filed by the cyber crime unit of Kohima Police in Nagaland, it said.
"During the search, various incriminating documents have been recovered and seized," ED said in a statement.
"Huge balances were found to be maintained in the virtual accounts of the involved entities with payment aggregators like 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," it said.
Meanwhile, Paytm said in a statement, "as mentioned in our exchange filing, ED instructed us to freeze certain amount from MIDs of specific merchant entities and none of these funds belong to Paytm or our group companies."
What Is HPZ Token?
The HPZ Token was an app-based service, promising users a large gain against their investments once they mine the token in machines. This includes Bitcoin and other cryptocurrencies. The creators of this app, lure victims into investments on the pretext of doubling their investment through the app HPZ Token.
Users received these payments through UPIs and other various payment gateways/nodal accounts/individuals. A part of this amount was given to investors and remaining amount was diverted to various individual and company accounts through various PGs/banks. From here it was partly it was siphoned off in digital/virtual currencies. After that, the fraudsters stopped the payments and the website became inaccessible, ED said.
Companies Issue Clarification
Clarifying on the same, an Easebuzz spokesperson 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."
Also, Cashfree Payments’ spokesperson said, “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.”
EaseBuzz spokesperson said none of the parties mentioned in the ED’s statement belonged to their 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," the spokesperson 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," Razorpay Spokesperson said.
Paytm Plunges
Shares of One97 Communications, which owns Paytm, plunged 6 per cent in Friday’s trade after reports of ED blocking funds worth over Rs 46 crore in payment gateways.
The stock plunged 6 per cent to the day’s low of Rs 686.85 apiece on NSE. The scrip last recouped some losses and was down 3 per cent. The stock has lost as much as 47 per cent on a YTD basis. The stock, however, recouped losses later on to end the day at Rs 717.40, down less than 2 per cent.
