India’s Enforcement Directorate froze crypto and fiat assets valued at $46 million belonging Vauld. In a money laundering case, the agency is investigating Vauld and one of its customers.
India’s Enforcement Directorate, a law enforcement agency that investigates financial crime, has frozen assets in the amount of 3.7 billion rupees (roughly $46 million) belonging Vauld. Vauld is a troubled cryptocurrency lender.
ED searched for Yellow Tune Technologies in India and discovered that the company was a client Vauld’s Indian entity Flipvolt Technologies. According to a statement dated Friday, this was a money laundering case. This case is related to Chinese loan apps, which were involved in digital lending in India.
Most Chinese companies have been entering India to do business in lending, reportedly by establishing fintech applications. However, the Reserve Bank of India (RBI), which did not grant them a license for non-banking financial companies (NBFCs), was allowing them to make agreements with local NBFCs.
“While conducting fund trail investigations, ED discovered that large amounts of money to the tune Rs 370 Crore had been deposited by 23 entities, including the accused NBFCs as well as their fintech companies, into the INR wallets M/s Yellow Tune Technologies Private Limited and Crypto Exchange M/s Flipvolt Technologies Private Limited. These funds were not proceeds of crime derived through predatory lending practices,” ED stated.
The report stated that Yellow Tune Technologies, with Flipvolt’s assistance, helped fintech companies avoid regular banking channels and take out all the fraudulent money in crypto assets.
ED also stated that Vauld did not provide a complete trail of crypto transactions made in Yellow Tune Technologies’s name and that the company maintains lax know your customer (KYC), and anti-money laundering processes.
It encouraged obscurity and lax AML standards, actively supporting M/s Yellow Tune in laundering proceeds of crime worth Rs370 Crore via the crypto route. ED stated that Flipvolt Crypto-exchange has frozen equivalent movable assets up to Rs 367.67 crore in the form Bank and Payment Gateway Balances of Rs 164.4 Crore and Crypto assets in their pool accounts of Rs 203.26crore. This is until the crypto-exchange provides a complete fund trail.
Vauld’s latest setback is ED’s decision. stopped client withdrawals last month and owes a total amount of $402 million to creditors . The Block reported the situation at the time. The majority of that sum comes from the deposits of individual retail investors, which is $363 million or 90%.
Vauld sought protection from creditors. It received three months of protection from the Singapore High Court earlier this month to continue exploring its options. Vauld has until November 7th to decide how it will proceed.
Competitor Nexo is currently conducting due diligence on Vauld in preparation for an acquisition. These latest developments make it difficult to predict whether or not the deal will go through.
This is ED’s second move in crypto in recent days. Last week, the Indian law enforcement agency frozen bank accounts worth 647 million Rupees belonging WazirX. WazirX is a local crypto exchange.