India’s Enforcement Directorate (ED) has frozen crypto exchange Vauld’s crypto and bank assets worth about INR 370 crore ($46,439,181). Vauld has stopped deposits and withdrawals since last month. Indian law enforcement agencies are reportedly looking into more than 10 cryptocurrency exchanges.
Indian Authority Freezes Another Cryptocurrency Exchange’s Assets
Enforcement Directorate (ED), a government-owned law enforcement and intelligence agency, has placed a freeze on assets from another cryptocurrency exchange.
The agency announced Friday that it has conducted searches at various premises of Yellow Tune Technologies in Bangalore and has issued an order to freeze its bank balances, payment gateway balances, and crypto balances of Flipvolt Technologies’ crypto exchange totaling 370 crore rupees ($46,439,181) worth of assets. Flipvolt Technologies is the India-registered entity of Singapore-headquartered Vauld, a cryptocurrency trading, borrowing, and lending platform.
ED explained that approximately 370 crore rupees were deposited by 23 entities into the INR wallets of Yellow Tune Technologies held with Flipvolt Technologies’ crypto exchange. These amounts were “proceeds of crime derived from predatory lending practices,” the authority said, elaborating:
Yellow Tune by using the assistance of Flipvolt crypto exchange … assisted the accused fintech companies in avoiding regular banking channels, and managed to easily take out all the fraud money in the form of crypto assets.
The agency alleged that Flipvolt “has very lax KYC [know-your-customer] norms, no EDD [enhanced due diligence]Mechanism without any check as to the origin of funds or mechanism for raising STRs [suspicious transaction reports].”
ED found that Flipvolt also failed to provide a full trail of crypto transactions by Yellow Tune Technologies. They could not even supply KYC information for any of the other wallets.
The authority concluded that “by encouraging obscurity and having lax AML [anti-money laundering] norms,” the crypto exchange “has actively assisted Yellow Tune in laundering the proceeds of crime worth 370 crore rupees using cryptocurrency,” adding:
Flipvolt crypto-exchange has frozen equivalent movable assets up to Rs 367.67 million in bank and payment gateway balances of Rs 164.4 crore, and in crypto assets in their pools accounts of Rs 203.26 lakh, until the crypto exchange provides a complete trail.
Vauld’s website explains that “As soon as a user deposits funds to their Vauld wallet, it goes to a centralized pool.” From this pool, the funds are allocated for lending and trading. PMLA, 2002, is India’s Prevention of Money Laundering Act.
The crypto exchange told Businesstoday: “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.”
After halting deposits and withdrawals last month, Vauld announced a restructuring plan on July 4 due to “financial challenges” it faced in recent months. Defi Payments Pte Ltd. is the Singapore entity responsible for Vauld. It also requested court protection to prevent legal proceedings from being commenced against them. The exchange has not been licensed in Singapore at the moment.
Vauld, a leading Indian lender and borrower platform, raised $25m in Series A financing last July. Valar Ventures (a U.S. venture capital fund founded by billionaire Peter Thiel) led the round. The round was also attended by Pantera Capital and Coinbase Ventures as well as CMT Digital, Gumi Cryptos (Robert Leshner), Cadenza Capital and other investors.
Last week, ED declared that Wazirx’s bank assets had been frozen by the authority. Wazirx is a prominent Indian crypto exchange. The authority detailed that it conducted searches on one of the directors of Zanmai Labs, which owns Wazirx, and issued an order to freeze the exchange’s bank balances to the tune of INR 64.67 crore.
ED similarly explained that the action against Wazirx is part of a money laundering investigation involving non-bank financial companies (NBFC) and their fintech partners for “predatory lending practices in violation of the RBI [Reserve Bank of India] guidelines.”
The Economic Times also reported that ED was investigating at least 10 crypto exchanges in connection to alleged laundering of more than INR 1000 crore. Crypto trading platforms were accused of not conducting adequate due diligence, and failing to report suspicious transactions.
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