“We, like several other players offering crypto services in India, had received summonses from the Directorate of Law Enforcement, Hyderabad, India in the month of July 2022, requesting certain information/documents. In accordance with the summons, we have fully cooperated with the Enforcement Department and provided all required information/documentation,” according to the statement released by the company.
“It is regrettable that, despite the extension of our cooperation, the Law Enforcement Directorate has proceeded with the adoption of a freezing order, under which the crypto assets in the company’s wallets have been frozen to the tune of approximately Rs 204 crore. respectfully disagree with the freezing order,” the company said in a blog post posted on its website.
The ED on Friday tied up assets worth Rs 370 crore belonging to a Bengaluru-based company linked to the instant loan apps case. The assets were parked in bank accounts, payment gateway balances, and wallets on crypto exchange Flipvolt. Flipvolt is the Indian arm of Singaporean crypto lender Vauld.
ED said it conducted searches at several premises associated with the company, Yellow Tune Technologies Pvt. Ltd, over three days starting August 8. Its investigation revealed that Yellow Tune was a front company with Chinese nationals on its board, and that funds to the tune of Rs 370 crore were deposited by 23 entities, including accused non-bank financial companies (NBFCs) and their fintech arms, in the Indian rupee wallets of Yellow Tune.
ET reported on August 11 that the investigative agency is investigating at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime from the accused companies under investigation. in the case of the instant loan application, most of them having a connection with China.
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ED alleged on Friday that Vauld promoted obscurity and had lax anti-money laundering standards and actively helped the fictitious entity launder money through the crypto channel. He added that the company did not provide a full trail of crypto transactions made by Yellow Tune.
“Therefore, equivalent moveable assets to the extent of Rs 367.67 crore lying with crypto exchange Flipvolt in the form of bank and payment gateway balances worth Rs 164.4 crore and assets coins in their pool accounts worth Rs 203.26 crore are frozen,” ED said. Friday.
The agency said it had managed to trace Rs 2.31 crore of Yellow Tune’s assets so far.
The Coinbase Venture-backed crypto firm denied ED’s claim. “We follow strict KYC requirements in every country, including India. We seek legal advice on our best course of action to protect the interests of the company, its customers and all stakeholders. We have fully cooperated with the Law Enforcement Branch and will continue to expand our cooperation to ensure that we continue to remain a safe place for customers to transact and own cryptocurrencies,” Vauld said.
The ED action comes at a time when Vauld is undergoing due diligence to be fully acquired by Nexo, another crypto lender, as it faces serious financial difficulties. The Singaporean crypto exchange suspended all deposits and withdrawals on its platform in July, following the collapse of stablecoin TerraUSD and its sister token Luna.
This is the second time this month that the ED has frozen the bank accounts of a crypto trading platform. In a press release last Friday, the agency said it had recently conducted investigations against a director of Zanmai Labs, owner of popular crypto exchange WazirX, and issued an order freezing his bank assets totaling Rs 64 .67 crore.