The ED on Friday said it froze funds of Rs 46.67 crore from merchant entities kept in online payment gateway accounts of Easebuzz, Razorpay, Cashfree and Paytm following raids this week against a “Chinese-controlled” investment token application.
The funds were frozen under the anti-money laundering law.
The latest action comes after the Law Enforcement (ED) Directorate earlier this month raided the premises of Razorpay, Paytm and Cashfree in Bengaluru over alleged irregularities in the operations of app-based lending companies instant “controlled” by Chinese. Later, a seizure order for Rs 17 crore kept in their accounts was issued.
The latest raids were launched on September 14 at several of the accused’s premises in Delhi, Mumbai, Ghaziabad, Lucknow and Gaya in an under-investigation money laundering case against an app-based token called HPZ and related entities.
Sixteen premises of banks and payment gateways in Delhi, Gurugram, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore were also raided by ED as part of the same operation, the federal agency said in a statement.
The ED case, filed under the criminal sections of the Prevention of Money Laundering Act (PMLA), arises out of an October 2021 FIR against the accused company and its related persons by the cybercrime unit of Kohima Police in Nagaland.
“During the search, various incriminating documents were seized. Huge balances were found in virtual accounts of entities involved with payment aggregators. Rs 33.36 crore were found with Easebuzz Private Limited, Pune, Rs 8.21 crore with Razorpay Software Private Limited, Bengaluru, Rs 1.28 crore with Cashfree Payments India Private Limited, Bengaluru and Rs 1.11 crore with Paytm Payments Services Limited, New Delhi,” the ED said.
Rs 46.67 crore was frozen in various bank accounts and virtual accounts, he said.
A spokesperson for Cashfree Payments said they “continue to extend their diligent cooperation to ED operations.”
“We were able to provide the required and necessary information within hours on the day of the survey. Cashfree Payments operations and onboarding processes are fully compliant with applicable regulations,” the spokesperson said. in a press release.
Paytm said the frozen funds “do not belong to the company” and the entities under investigation are “independent merchants”.
The ED said that HPZ Token “promised users significant gains by investing in Bitcoin and other cryptocurrency mining machines.” The “fraudsters” tricked victims into investing in the company under the guise of doubling their investment through the HPZ Token app, he said.
“Payments were received from users through UPI and other payment gateways/node accounts/individuals,” the polling firm said.
While part of the amount was refunded to investors, the rest was diverted to various individual and corporate accounts via payment gateways/banks from where it was partly “siphoned off” in digital/virtual currencies, the agency said.
Some time later, the scammers stopped the payments and the website became inaccessible.
The HPZ token was operated by Lillion Technocab Private Ltd and Shigoo Technology Private Limited. The latter was found “related to various Chinese-controlled companies”, ED said.
A spokesperson for Razorpay said it proactively blocked all suspicious entities carrying out illegal activities through multiple payment gateways and banks about a year and a half ago and shared the details with authorities.
“None of the funds ordered frozen belong to Razorpay.
“We will continue to provide necessary information to authorities to assist in this investigation. We would like to reiterate that all of our operations and onboarding processes adhere to the highest standards of governance and regulatory guidelines,” Razorpay said.
Easebuzz said, “None of the parties mentioned in the ED statement belonged to our merchant base.”
“The entities mentioned by the authorities were only the counterparties of the merchant who used our payment gateway and this merchant had been proactively identified and blocked by us well before the start of the investigation, in accordance with our internal management process. risk and compliance.
“We intend to cooperate fully with investigating authorities as we are committed to ensuring that our business activities comply with applicable regulations,” an Easebuzz spokesperson said.
These payment gateway companies came under the ED scanner in 2020 shortly after the spread of the Covid pandemic in India.
An investigation under the criminal sections of the PMLA has been launched by the ED after scores of debtors ended their lives with police saying they were coerced and harassed by these loan app companies into posting their personal information available in their phones and through authoritarian methods to threaten them.
It has been alleged that the companies obtained personal data from the loan taker when downloading these apps, even though their interest rates were “usurious”.
The ED had said that alleged proceeds of crime were routed through these payment gateways.
He said various other companies were also receiving funds from the public under the guise of operating apps and websites for gambling, lending and other such online activities.
“ED suspects the involvement of Jilian Consultants India Pvt Ltd, Gurugram, behind various companies involved in these frauds,” it said.
One such entity, Mad-Elephant Network Technology Private Limited, in agreement with X10 Financial Services Limited, operated various lending applications such as Yo-Yo cash, Tufan Rupees and Coco cash. Su Hui Technology Private Limited, under an agreement with Nimisha Finance India Private Ltd., operated lending applications, the ED said.
Finance Minister Nirmala Sitharaman had discussed the issues of illegal loan applications during a meeting of senior officials from her ministry and RBI officials on September 8 and it was decided to take appropriate steps to verify the operation of these applications.
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