The Enforcement Directorate (ED) has frozen around ₹500 crore linked to the HPZ Token scheme in a move to tackle cryptocurrency scam. This operation involves eight major payment gateways, including Razorpay, PayU, Easebuzz, and Paytm. The scam has defrauded investors of over ₹2,200 crore across 20 states in India.
Chinese nationals involvement:
The HPZ Token scam, allegedly orchestrated by a group of 10 Chinese nationals, promised high returns from cryptocurrency mining through a mobile app. The accused lured investors with the allure of quick profits, setting up companies in multiple states such as Karnataka, Haryana, Uttar Pradesh, and Maharashtra.
The ED’s investigation revealed plans by the suspects to transfer the ‘proceeds of crime’ out of India. Before these funds could reach their intended beneficiaries, the ED managed to freeze a portion of them with the payment gateways. This occurred during the window when bulk payments were held, typically for one to two days.
Razorpay has publicly denied any wrongdoing. The company stated, “The recent news reports suggesting Razorpay is under scrutiny by the Enforcement Directorate (ED) are factually inaccurate and misleading.” They emphasized that they have not received any communication from the ED regarding the case. The spokesperson affirmed Razorpay’s commitment to governance and compliance.
ED Reports:
As the investigation unfolds, the ED is digging deeper into the money trail. They are examining whether the payment gateways filed suspicious transaction reports (STR), which could have alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU). A senior ED official noted that the accused operated numerous bank accounts, including 84 in Delhi, 37 in Karnataka, and 26 in Haryana, as part of their intricate fraud scheme.
Where it started?
The case originated from a complaint filed by the cyber crime police in Kohima, Nagaland, leading to various charges under the Indian Penal Code and the Information Technology Act. Recently, a PMLA court in Nagaland declared Bhupesh Arora, a Delhi resident, and his associates as fugitives for failing to appear before the agency despite a non-bailable warrant.
This crackdown highlights the growing concerns over cryptocurrency scams in India and the need for stringent regulations to protect investors. The ED’s actions serve as a warning to those involved in similar illicit activities.
