The Enforcement Directorate (ED) continued its investigation into the loan and betting apps run by Chinese companies on Friday, conducting search operations at six business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow, and Gaya in connection with its money laundering probe related to the app-based token named HPZ and related entities. In connection with the HPZ token case, the agency also froze Rs 46 crore in accounts of Paytm, Razorpay, and Cashfree, as well as Pune-based Easebuzz Private Limited.
Details about The ED initiates new searches in the Chinese loan app case and freezes Rs 46 crore with several payment gateways
In relation to the case, the ED stated that searches were conducted at 16 other premises of banks and payment gateway branches and offices in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur, and Bengaluru.
The ED case is based on an FIR filed by the Cyber Crime Police Station in Kohima, Nagaland on November 8, 2021.
“Various damning documents were uncovered and seized during the search.” Massive sums were discovered in the virtual accounts of the organizations working with payment aggregators. Easebuzz Private Limited, Pune, found Rs 33.36 crore, Razorpay Software Private Limited, Bangalore, Rs 1.28 crore, Cashfree Payments India Private Limited, Bangalore, and Paytm Payments Services Limited, New Delhi. “A total of Rs 46.67 crore was discovered and blocked in various bank accounts and virtual accounts,” according to an ED statement.
In conjunction with a different case involving loan apps, the ED raided Paytm, Razorpay, and Cashfree locations. The agency has frozen nearly Rs 47 crore belonging to a Chinese company operating illegal betting and loan apps in India in August 2020. The government then held online payment gateways such as Paytm, Razorpay, and Cashfree liable for “lack of due diligence” and “failure to notice suspicious transactions.”
At least two payment processors denied any wrongdoing.
“Easebuzz would like to clarify that none of the parties referenced in the ED’s statement were members of our merchant base.” The organizations referenced by authorities were simply the counterparties of the merchant who used our payment gateway, and this merchant had been proactively identified and prohibited by us long before the inquiry began, in accordance with our internal risk and compliance approach. We aim to fully cooperate with the investigating authorities because we are committed to ensuring that our company activities adhere to existing legislation.”
“We continue to give our diligent co-operation to the ED activities,” a Cashfree representative said. On the day of the inquiry, we were able to give relevant and sufficient information within a few hours. Cashfree Payments’ operations and onboarding methods are entirely compliant with existing regulations.”
According to ED, the HPZ Token was an app-based token that offered customers high returns on investment by investing in Bitcoin and other cryptocurrency mining devices. The fraudsters’ strategy was to first entice victims to invest in the company under the guise of doubling their investment using the app HPZ Token.
“Users’ payments were accepted via UPIs and other payment gateways/nodal accounts/individuals.” Part of the money was returned to the investors, while the rest was redirected to various individual and corporate accounts via various payment gateways/banks, where it was siphoned off in digital/virtual currencies. The scammers then stopped making payments, and the website became unreachable,” the ED said in a statement.
A client-side App Token is an authentication strategy in which the application has only read and write access to its own account. There is no need to authorize a user while utilizing this authentication approach because the application is immediately authenticated as the service account that belongs to that application.
“Investigation discovered that M/s Lillian Technocab Private Ltd and M/s Shigoo Technology Private Limited operated the HPZ token.” M/s Shigoo Technology Private Limited was also discovered to be tied to a number of Chinese-controlled companies. It was also uncovered that several additional firms were collecting state cash under the guise of operating numerous apps/websites for gaming/loans/other purposes. The ED suspected M/s Jilian Consultants India Pvt Ltd, Gurugram of being behind different businesses implicated in these frauds,” according to the ED release.
According to the ED, one such firm, M/s Mad-Elephant Network Technology Private Limited, was reportedly operating numerous lending apps in collaboration with X10 Financial Services Limited (Yo-Yo cash, Tufan Rupees, Coco cash, etc.). Similarly, the ED stated that Su Hui Technology Private Limited had launched lending apps in collaboration with M/s Nimisha Finance India Private Limited.
