“We, like several other players offering crypto services in India, had received summons from the Enforcement Directorate, Hyderabad, India in the month of July 2022, seeking certain information/documents. In due compliance with the summons, we fully cooperated with the Enforcement Directorate and provided all the required information/documents,” according to the statement released by the company.
“It is unfortunate that, despite extending our cooperation, the Enforcement Directorate has proceeded to pass a freezing order, pursuant to which crypto assets in the pool wallets of the company have ordered to been frozen to the extent of approximately Rs 204 crore. The freezing order of the Enforcement Directorate is specific to that one customer that availed our services for a brief period of time, whose account we subsequently deactivated. We respectfully disagree with the freezing order,” the company said in a blogpost published on its website.
On Friday, the ED
attached assets worth Rs 370 crore belonging to a Bengaluru-based company linked to the instant loan apps case. The assets were parked in bank accounts, payment gateway balances, and wallets on the Flipvolt crypto exchange. Flipvolt is the Indian arm of Singaporean crypto lender Vauld.
The ED said it had conducted searches at several premises linked to the company, Yellow Tune Technologies Pvt. Ltd, over three days starting August 8. Its probe revealed that Yellow Tune was a shell company with Chinese nationals on its board, and that funds to the tune of Rs 370 crore were deposited by 23 entities, including accused non-banking financial companies (NBFCs) and their fintech arms, into Yellow Tune’s Indian rupee wallets.
ET reported on August 11, that the investigating agency is probing at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime of the accused firms under investigation in the instant loan app case, most of them having a China link.
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ED alleged on Friday that Vauld encouraged obscurity and had lax anti-money laundering norms and has actively assisted the shell entity in laundering money via the crypto route. It added that the company failed to provide a complete trail of crypto transactions made by Yellow Tune.
“Therefore, equivalent movable assets to the extent of Rs 367.67 crore lying with Flipvolt crypto exchange in the form of bank and payment gateway balances worth Rs 164.4 crore and crypto assets lying in their pool accounts worth Rs 203.26 crore, are frozen,” ED said on Friday.
The agency said it has managed to trace Rs 2.31 crore of Yellow Tune’s assets so far.
The Coinbase Venture-backed crypto company has denied ED’s assertion. “We follow strict KYC requirements in every country, including India. We are seeking legal advice on our best course of action in order to protect the interests of the company, its customers, and all the stakeholders. We have fully cooperated with the Enforcement Directorate and will continue to extend our cooperation to ensure we continue to remain a safe place for customers to transact and own cryptocurrencies,” Vauld said.
The ED’s action comes at a time when Vauld is undergoing
due diligence to be fully acquired by Nexo, another crypto lender, as it faces severe financial challenges. The Singaporean crypto exchange
suspended all deposits and withdrawals on its platform in July, following the collapse of the TerraUSD stablecoin and its sister token Luna.
This is the second time this month that the ED has frozen the bank accounts of a crypto trading platform. In a press release last Friday, the agency said it recently conducted searches against a director of Zanmai Labs, which owns the popular crypto exchange WazirX, and
issued an order to freeze its bank assets totalling Rs 64.67 crore.
