The Enforcement Directorate has seized ₹46.67 crore from various bank and virtual accounts of four fintech firms during a money laundering probe into a Nagaland-based app that promised large gains against investment in mining machines for cryptocurrencies. In this case, too, the ED said it has found alleged linkages of Chinese entities, which were conning people of Nagaland through apps offering loans.

Of the total seized amount, ₹33.36 crore was found with Pune-based Easebuzz Private Limited; ₹8.21 crore with Razorpay Software Private Limited of Bangalore; ₹1.28 crore with Cashfree Payments India Private Limited, also of Bangalore; and ₹1.11 crore with Paytm Payments Services Limited, New Delhi, said the ED in an official release.

On Wednesday, the agency officials carried out searches at six business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow and Gaya. Besides, 16 other locations of banks and payment gateways branches and offices in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore were raided to investigate the charges that HPZ Token and related entities fleeced people on charges of high returns against investments, said ED officials.

Reacting to ED’s action, a EaseBuzz spokesperson said: “We, at Easebuzz, would like to clarify that none of the parties mentioned in the ED’s statement belonged to our merchant base. The 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.”

Similarly, Cashfree Payments’ spokesperson said: “We continue to extend our diligent co-operation 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.”

A Razorpay spokesperson said: “With regards to the ongoing investigation against a few suspicious entities who conducted illegal business through multiple payment gateways/banks about 1.5 years ago, we proactively blocked all those suspicious entities and funds associated with them, and have shared their details with authorities. None of the funds which have been directed to be frozen by the authorities belong to Razorpay. As mentioned earlier, we will continue to provide necessary information to authorities to assist in this investigation. We would like to reiterate that all our operations and on-boarding processes adhere to the highest standards of governance & regulatory guidelines.”

Meanwhile, Paytm tweeted that “this is absolutely false news, as clarified by the same handle later. As mentioned in our exchange filling, ED instructed us to freeze certain amount from MIDs of specific merchant entities and none of these funds belong to Paytm or our group companies”.

The modus-operandi, of the fradusters, alleged the ED, was to first lure the victims to invest in the company on the pretext of doubling their investment through the app HPZ Token. “Payments were received from users through UPIs and other various payment gateways/nodal accounts/individuals. Part-amount was paid back to the investors and remaining amount 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 disclosed. After that, the fraudsters stopped the payments and the website became inaccessible, the sleuths pointed out.

The ED said its investigation revealed that the HPZ Token was operated by M/s Lillion Technocab Private Ltd and M/s Shigoo Technology Private Limited. M/s Shigoo Technology Private Limited was also found linked to various Chinese-controlled companies. Various other companies too were indulging in receiving funds from public on the pretext of operating various apps and websites for gaming, offering loan and other activities. The ED suspected involvement of M/s Jilian Consultants India Pvt Ltd, Gurugram behind various companies involved in these frauds.

One such entity, said the agency, was M/s Mad-Elephant Network Technology Private Limited, which in agreement with X10 Financial Services Limited, was operating various loan apps — Yo-Yo cash, Tufan Rupees, Coco cash. Similarly, Su Hui Technology Private Limited, in agreement with M/s Nimisha Finance India Private Limited, had operated other loan apps.

During the search, the ED is said to have recovered various incriminating documents and huge balances were found to be maintained in the virtual accounts of the involved entities with payment aggregators. The ED took the investigation from Cyber Crime Police Station of Kohima, Nagaland which had registered a casse on October 8, 2021. The scam, according to Nagaland police, began around June 2021 and within a month the payments and returns due to investors were stopped and the HPZ Token's website became inaccessible.

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