On August 12, an Indian law enforcement agency named the Enforcement Directorate researches monetary wrongdoing in India and has frozen vauld (a cryptocurrency lender) assets worth $46 million (INR 3.7 billion).
As per the statement provided by ED on August 12, it conducted an investigation into an Indian organisation called Yellow Tune Technologies and tracked down that this organisation, a client of Vauld’s Indian entity Flipvolt Technologies, was engaged in a tax evasion case. The case is connected with Chinese debt-providing applications that were engaged with digital lending in India.
Many Chinese firms have been supposedly entering India since 2019 to establish lending businesses by laying out fintech applications. However, as the Reserve Bank of India (RBI) was not providing them with NBFC permits, they were settling on agreements with local NBFCs.
ED said, “During fund trail examination, ED observed that huge amount of assets worth of Rs 370 Crore was credited by 23 entities into the INR wallets of M/s Yellow Tune Technologies Private Limited held with Crypto Exchange M/s Flipvolt Technologies Private Limited, including accused NBFCs and their fintech firms. These amounts were only returns of wrongdoing got from ruthless lending practices.”
ED further said that with help from Flipvolt, Yellow Tune Technologies helped accused fintech firms to remain away from regular financial channels and take a different path to take out all fraudulent cash as crypto assets.
ED continued and said that Vauld failed to give the exact path of crypto transactions made by Yellow Tune Technologies and that it has a less effective know-your-client (KYC) procedure and is against illegal anti-money laundering (AML) processes.
By encouraging obscurity and having careless AML standards, it has effectively helped M/s Yellow Tune in laundering the returns of wrongdoing worth Rs 370 Crore through the crypto path. Therefore, the same amount of money lying in their pool accounts and in Bank and Payment Gateway Balances worth INR 203.26 Crore and INR 367.67 Crore respectively are frozen under PMLA, 2002, till the total amount trail is given by the crypto-exchange,” ED said.
This is the latest action taken by the ED against Valud, which owes a sum of $402 million to its creditors. Moreover, Vauld has received a time period of three months from the Singapore High Court to decide its future path and currently, it is in the acquisition process by Nexo.
This is the second time when ED has taken action against crypto space. Earlier week ED has frozen the WazirX bank balance of INR 647 million.