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ED freezes ₹500 crore linked to crypto scam, payment gateways under radar
The ED is probing the illicit operation of the HPZ Token scam under which investors have been defrauded of over ₹2,200 crore
In a crackdown against one of the biggest cryptocurrency scams involving Chinese nationals, the Enforcement Directorate (ED) froze approximately ₹500 crore in virtual accounts linked to eight major payment gateways, including Razorpay, PayU, Easebuzz, and Paytm.
The ED is probing the illicit operation of the HPZ Token scam under which investors have been defrauded of over ₹2,200 crore across 20 states in India, The Times of India reported.
The accused were planning to remit the 'proceeds of crime' out of the country, a part of which was frozen with the payment gateways before they were remitted to beneficiaries.
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The publication reported that when making bulk payments, the amount remained with the gateways for a day or two, during which ED froze around ₹500 crore.
Meanwhile, Razorpay said it had not received such communication.
"The recent news reports suggesting Razorpay is under scrutiny by the Enforcement Directorate (ED) are factually inaccurate and misleading. We have not received any new notices, communications, or inquiries from the ED related to the issues referenced in these articles. Furthermore, we were not approached by the media for comment before the publication of these reports. As a responsible and compliant corporate entity, we want to reiterate the fact that Razorpay has and will continue to hold ourselves to the highest level of governance and conduct," a company spokesperson said.
What is HPZ Token scam?
The HPZ Token scam involves a group of 10 Chinese nationals, who allegedly orchestrated the multi-state scam by enticing people to invest in cryptocurrency mining through the mobile app, HPZ Token and promised returns over it.
Under this, the accused set up companies in at least 20 states, luring investors with the promise of high returns from mining Bitcoin and other cryptocurrencies.
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The registered companies were established in states such as Karnataka, Haryana, Uttar Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, and West Bengal.
A senior ED official said that the agency was investigating the money trail and checking whether the payment gateways had generated suspicious transaction reports (STR), which alerted the RBI and the Financial Intelligence Unit (FIU).
The accused are said to have operated numerous bank accounts, including 84 in Delhi, 37 in Karnataka, and 26 in Haryana, as part of their widespread fraud.
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The ED had initiated an investigation into the HPZ Token scam based on a case registered by the cyber crime police station in Kohima, Nagaland, under various sections of the Indian Penal Code and the Information Technology Act.
On January 22, a PMLA court in Nagaland declared Delhi resident Bhupesh Arora and his close associates as fugitives in the case after they failed to appear before the agency despite a non-bailable warrant.
