The Enforcement Directorate on Friday said it has frozen Rs 46.67 crore funds of merchant entities kept in four online payment gateway accounts of Easebuzz, Razorpay, Cashfree and Paytm after it carried out raids this week against a "Chinese-controlled" investment token app. The funds have been frozen under the anti-money laundering law. The latest action comes after the agency earlier this month raided the Bengaluru premises of Razorpay, Paytm and Cashfree over alleged irregularities in the operations of instant app-based loan giving companies "controlled" by Chinese persons and later similar seizure order for Rs 17 crore funds kept in their accounts was issued.
The latest searches were launched on September 14 at multiple premises of the accused in Delhi, Mumbai, Ghaziabad, Lucknow and Gaya in a money laundering case being probed against an app-based token called HPZ and its related entities. Sixteen premises of banks and payment gateways in Delhi, Gurugram, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bengaluru were also searched by the ED officers as part of the same operation, the federal agency said in a statement.
The ED case, filed under criminal sections of the Prevention of Money Laundering Act (PMLA), stems from an October, 2021 FIR filed against the accused company and its linked persons by the cyber crime unit of the Kohima Police in Nagaland.
"During the search, various incriminating documents have been recovered and seized. Huge balances were found to be maintained in the virtual accounts of the involved entities with payment aggregators like Rs 33.36 crore was found with Easebuzz Private Limited, Pune, Rs 8.21 crore with Razorpay Software Private Limited, Bangalore, Rs 1.28 crore with Cashfree Payments India Private Limited, Bangalore and Rs 1.11 crore with Paytm Payments Services Limited, New Delhi," the ED said.
An amount Rs 46.67 crore was freezed in various bank accounts and virtual accounts, the statement said. A spokesperson for Cashfree Payments said they continue to extend their diligent cooperation to the ED operations. "We were able to provide the required and necessary information within a few hours on the day of enquiry. The operations and on-boarding processes of Cashfree Payments are fully compliant with existing regulations," the spokesperson said in a statement.
Paytm said the funds frozen by the ED "with regards to the loan app case, do not belong to the company. "These entities are independent merchants, who are being investigated," it said.
Easebuzz said that none of the parties mentioned in the EDâ€™s statement belonged to their merchant base. â€śThe mentioned entities by authorities were only the counterparties of the merchant, who was using our payment gateway and this merchant had been proactively identified and blocked by us much before the investigation had started, as per our internal risk and compliance process. We intend to fully co-operate with the investigation authorities, as we are committed to ensure that our business operations comply with the existing regulations.â€ť
The ED said HPZ Token "promised users of large gains against investment by investing in mining machines for Bitcoin and other crypto currencies." The modus operandi of the "fraudsters" was to first lure the victims to invest in the company on the pretext of doubling their investment through the app HPZ Token, it said.
"Payments were received from users through UPI and other various payment gateways/nodal accounts/individuals," it said. While part amount was paid back to the investors, the remaining was diverted to various individual and company accounts through various payment gateways/banks from where partly it was "siphoned off" in digital/virtual currencies, the agency said. Sometime after this, the fraudsters stopped the payments and the website became inaccessible, the ED said.
HPZ token was operated by Lillion Technocab Private Ltd and Shigoo Technology Private Limited and the latter company was also found "linked to various Chinese controlled companies." These payment gateway firms were brought under the probe scanner by ED in 2020 soon after the COVID-19 pandemic broke in the country.
The ED initiated a probe under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of instances of gullible debtors ending their lives came to the fore from various states, with the police stating they were being coerced and harassed by these loan app (application) companies by publicising their personal details available in their phones and by undertaking high-handed methods to threaten them.
It was alleged that the companies sourced all personal data of the loan-taker at the time of downloading of these apps on their phones, even as their interest rates were â€śusurious". The agency had said the alleged proceeds of crime in the case were routed through these payment gateways.
The agency said various other companies were also indulging in receiving funds from public on pretext of operating various apps/websites for gaming, loans and other such online activities. "The ED suspected involvement of Jilian Consultants India Pvt Ltd, Gurugram behind various companies involved in these frauds," it said. One such entity, Mad-Elephant Network Technology Private Limited in agreement with X10 Financial Services Limited was operating various loan apps like Yo-Yo cash, Tufan Rupees, Coco cash etc. Similarly, Su Hui Technology Private Limited, in an agreement with Nimisha Finance India Private Ltd., had operated loan apps, the ED said.
Finance Minister Nirmala Sitharaman had also discussed various issues related to illegal loan apps in a meeting of top officials of her ministry and RBI officers that was held on September 8 and it was decided to take appropriate measures to check operations of such apps.