The Indian Directorate of Enforcement (ED) said that these funds were nothing but illegal gains from predatory lending practices.
In order to force Vauld’s Indian branch to account for the illegal gains it sent out of the country, the Indian Directorate of Enforcement (ED) froze $46.4 million in its accounts.
The financial accounts of Bengaluru-based Yellow Tune Technologies, a provider of financial services, have been blocked, according to a Friday announcement from India’s Directorate of Enforcement (ED). Flipvolt, the Indian division of Singapore’s Vauld, held some of the accounts. The action is related to an ongoing investigation into money laundering by instant loan companies with ties to China. The organization has intervened in the cryptosphere in relation to that matter twice this week.
After determining that Yellow Tune was a shell company formed by two Chinese nationals using aliases, the financial watchdog declared it was freezing the company’s bank balances, payment gateway balances, and balances in the Flipvolt cryptocurrency exchange for a total of 3.7 billion rupees, or $46.4 million. Newspaper reports claim that the ED spent three days searching locations connected to Yellow Tunes.
The ED discovered 23 entities that had put money into Yellow Tune’s Flipvolt wallets before sending it elsewhere. The ED gave Flipvolt harsh criticism for how the company handled the money. The agency said:
“Lax KYC [Know Your Customer] norms, loose regulatory control of allowing transfers to foreign wallets without asking any reason/declaration/KYC, non-recording of transactions on Blockchains to save costs etc, has ensured that Flipvolt is not able to give any account for the missing crypto assets. It has made no sincere efforts to trace these crypto assets.”
The ED frozen funds in Flipvolt’s accounts equal to the amounts it transferred from Yellow Tune’s wallets to overseas wallets. The ED cited India’s Prevention of Money Laundering Act of 2002, “until entire fund trail is supplied by the crypto-exchange.” These monies were also described as “nothing but the proceeds of crime resulting from predatory lending practices” by the ED.
The most recent piece of bad news for Vauld is the attachment of the Flipvolt funds. The Singaporean exchange reduced its workforce by 30% in June and stopped account withdrawals at the start of July. Later that month, it turned to Singapore for defense against its creditors. It was given a three-month moratorium, which is comparable to Chapter 11 bankruptcy in the United States.
This week, it was revealed that the ED had frozen accounts containing $8.1 million of cash belonging to the cryptocurrency exchange WazirX and was looking into at least nine additional exchanges linked to Chinese-backed rapid loan businesses. The ED stated in its most recent statement that the case is still under investigation.