Tag: enforcement directorate

Razorpay Says No Funds Frozen by ED Following Raids, All Operations Adhere to Regulatory Guidelines

Payments solution provider Razorpay, which was raided by the Enforcement Directorate recently, in a statement said that it has cooperated with the agency and its funds have not been frozen. “This recent visit by the ED is part of the ongoing investigation against a few suspicious entities who conducted illegal business through multiple payment gateways/banks,” the company said in a statement on Friday.

“We proactively blocked all those suspicious entities and funds associated with them about 1.5 years ago, and have shared their details with the ED multiple times,” a Razorpay spokesperson said.

“All our operations and onboarding processes adhere to the highest standards of governance and regulatory guidelines. No funds of Razorpay were frozen,” the spokesperson said.

The fintech company stated that being a regulated financial institution it routinely cooperates with law enforcement agencies and provide necessary merchant information to assist in the investigation process.

The Enforcement Directorate had in mid-September said it has detected and frozen Rs. 46.67 crore kept in various bank accounts and virtual accounts of Razorpay, and three others — Easebuzz, Cashfree and Paytm — after raids in connection with a Chinese loan app case.

The agency had then said a total of 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.

The ED carried out search operations under the Prevention of Money Laundering Act (PMLA), 2002 at six business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow, Gaya and 16 other premises of banks and payment gateways branches and offices in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore in respect of an investigation related to the app-based token named HPZ and related entities.

The agency initiated a money laundering investigation on the basis of an FIR registered on October 8, 2021, filed under various sections of the Indian Penal Code (IPC) by Cyber Crime Police Station, Kohima, Nagaland.

The HPZ Token was an App-Based Token which promised users of significant gains against investment by investing in mining machines for Bitcoin and other cryptocurrencies, said the ED.

“The modus-operandi of the fraudsters was to first lure the victims to invest in the company on the pretext of doubling their investment through the app HPZ Token,” the agency had said then.

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Xiaomi India Dismisses Speculation on India Operations Being Moved to Pakistan as ‘False and Baseless’

Xiaomi on Friday dismissed speculation that the company might move its operations from India to Pakistan. The company responded to a tweet from a portal on Twitter that claimed the Chinese smartphone manufacturer might shift operations after its funds were frozed by authorities in India over alleged violation of the Foreign Exchange Management Act (FEMA) rules. Earlier this week, the Karnataka High Court had denied Xiaomi’s appeal for relief after nearly Rs. 5,500 crore worth of the company’s assets were frozen by the Enforcement Directorate in April. 

A tweet by South Asia Index on Thursday claimed that the Chinese smartphone maker might move its operations from India to Pakistan after the government of India froze the firm’s assets worth $676 million (roughly Rs. 5,500 crore). Xiaomi responded to the tweet on Friday, stating that it was “complete false and baseless”.

The company went on to state that it joined the government’s Make in India initiative after it entered the Indian market in 2014. It also added that 99 percent of the company’s smartphones and all its TV models were assembled in India. 

Xiaomi’s clarification on Twitter came a day after the company’s appeal to the Karnataka High Court to lift the freeze on $676 million (nearly Rs. 5,500 crore) worth of assets was denied by the court. The company is being probed by the ED for allegedly made illegal remittances to foreign entities by passing them off as royalty payments. 

The freezing of Xiaomi’s assets was confirmed by the competent authority under FEMA on September 30. The seizure is the highest amount in India to be confirmed by the authority till date, according to the ED.

The company had argued that the freezing of the assets was “severely disproportionate and has effectively halted the operations” of the company, according to a report by Reuters. The company previously claimed that its royalty payments were legitimate and truthful, and that it would “continue to use all means to protect the reputation and interests.”

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Enforcement Directorate Freezes Crypto Platform Vauld’s Assets Worth Nearly Rs. 370 Crore: Details

India’s Enforcement Directorate (ED) on Thursday froze $46.5 million (roughly Rs. 369.5 crore) in assets at the struggling Singapore-based cryptocurrency exchange Vauld. The country’s economic crime unit on Friday said in a press release that the frozen assets were parked in bank accounts, payment gateway balances, and wallets on the Flipvolt crypto exchange. 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.

“These amounts were nothing but proceeds of crime derived from predatory lending practices. Cryptocurrency so purchased was transferred to various unknown foreign wallet addresses,” stated the ED in a press release.

“Lax KYC norms, loose regulatory control of allowing transfers to foreign wallets without asking any reason/declaration/KYC, non-recording of transactions on Blockchains to save costs etc, has ensured that Flipvolt is not able to give any account for the missing crypto assets,” it added.

The enforcement agency said the frozen assets that belong to Vauld’s India entity would remain held until it provides a complete fund trail.

It is worth noting that Flipvolt is the Indian arm of Singaporean crypto exchange Vauld, which suspended all deposits and withdrawals on its platform in June, following the collapse of the TerraUSD stablecoin and its sister token Luna.

Last week, assets on WazirX totalling $8 million (roughly Rs. 63.5 crore) were frozen by the ED. WazirX is among the first crypto platforms and one of the biggest exchanges in India, with volumes exceeding $43 billion (roughly Rs. 3,41,658 crore) last year.

Vauld CEO Darshan Bathija, in an email issued to stakeholders last month, said the exchange has accrued liabilities totalling $400 million (roughly Rs. 3,178 crore) against assets of just $330 million (roughly Rs. 2,622 crore).

He attributed the gap as the result of mounting losses brought on by exposure to the TerraUSD drop as well as a decline in other significant cryptocurrencies like Bitcoin and Ether.

“We are investigating this matter, we kindly request your patience and support, we will keep you updated as soon as we have more information on this,” Vauld said in a statement sent to Business Today.

Vauld is already facing financial troubles and has halted withdrawals since July. The platform obtained a three-month moratorium extension from the Singapore High Court to explore different options a few days ago.

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ED Probing WazirX in 2 Cases, Transactions With Binance ‘Cloaked in Mystery’, Says MoS Finance

Minister of State for Finance Pankaj Chaudhary on Tuesday said the Enforcement Directorate is probing alleged money laundering of Rs 2,790 crore through crypto exchange WazirX. The ED is investigating two cases related to cryptocurrency against WazirX under the provisions of Foreign Exchange Management Act, 1999 (FEMA), he said in a written reply to the Rajya Sabha.

“In one of the cases, investigation done so far has revealed that one Indian Crypto-exchange platform, WazirX, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of Cayman Island based exchange Binance. Further it has been found that all crypto transactions between these two exchanges were not even being recorded on the blockchains and were thus cloaked in mystery,” he said.

Accordingly, he said, a show cause notice (SCN) has been issued under the provisions of FEMA against WazirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.

Further, in another case, it is noticed that Indian Exchanges namely WazirX has allowed the foreign users’ request to convert one crypto into another on its own platform as well as by using transfer from third-party exchanges namely FTX, Binance, etc, he said.

In reply to another question, Chaudhary said cryptocurrencies and non-fungible tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage.

Therefore, any legislation for regulation or for banning possession of and trade in such a borderless sector can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards, he said.

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India Should Stop ‘Regulatory Assault’ on Chinese Firms, Chinese State Media Says After Xiaomi Accusations

India should stop its “regulatory assault” on Chinese companies, state-backed Chinese newspaper Global Times said, after smartphone maker Xiaomi alleged threats of “physical violence” in Indian investigations.

Reuters reported on Saturday that Xiaomi had told a court that its top executives faced threats and coercion during questioning by the Enforcement Directorate investigating illegal remittances. The agency, the Enforcement Directorate, called the allegations “untrue and baseless”.

Citing the story, the Global Times in an opinion piece late on Sunday said the uncertainty surrounding Xiaomi’s “regulatory predicament should raise a red flag for India” and asked New Delhi to stop its “regulatory assault on Chinese companies”.

“The impression that Chinese and other foreign companies could be intentionally targeted and suppressed isn’t something good or favourable for India,” it said.

“It is of great importance for India to maintain normal and effective communication and coordination with Chinese investors.”

Many Chinese companies have struggled to do business in India due to tensions following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then — including TikTok — and tightened norms for Chinese companies investing in the country.

Global Times is a nationalistic tabloid published by the Communist Party’s People’s Daily. Its views do not necessarily reflect the official thinking of policymakers.

The Enforcement Directorate and a government spokesperson did not immediately respond to a request for comment on the Global Times’ view. Xiaomi, the biggest smartphone seller in India with a 24 percent market share and 1,500 employees, also did not respond.

The ED on April 29 seized $725 million (roughly Rs. 5,600 crore) in Xiaomi’s India bank accounts, saying it made illegal remittances abroad “in the guise of royalty” payments.

A court last week put on hold the agency’s decision, and the case will next be heard on May 12. Xiaomi denies any wrongdoing and says all royalty payments are legitimate.

“It is fair to say that Xiaomi hasn’t been able to communicate effectively with Indian regulators,” Global Times said. “What has happened to Xiaomi could be seen as another example of India’s crackdown on Chinese companies.”

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