New Delhi: The Enforcement Directorate (ED) said Friday it has frozen Rs 46.67 crore funds of merchant entities kept in online payment gateway accounts of ‘Easebuzz’, ‘Razorpay’, ‘Cashfree’ and ‘Paytm’ following 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 ED earlier this month, raided the Bangalore premises of ‘Razorpay’, ‘Paytm’ and ‘Cashfree’ over alleged irregularities in the operations of instant app-based loan-giving companies ‘controlled’ by Chinese persons. Later, a seizure order for Rs 17 crore kept in their accounts was issued.
The latest searches were launched 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 related entities.
Sixteen premises of banks and payment gateways in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore were also searched by the ED 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 against the accused company and its linked persons by the Kohima Police’s cybercrime unit in Nagaland.
“During the search, various incriminating documents have been seized. Huge balances were found in the virtual accounts of the involved entities with payment aggregators. An amount of Rs 33.36 crore was found with ‘Easebuzz Private Limited’, Pune, Rs 8.21 crore with ‘Razorpay Software Private Limited’, in 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. A total of Rs 46.67 crore was frozen in various bank accounts and virtual accounts, the ED informed.
A ‘Cashfree Payments’ spokesperson said they ‘continue to extend 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,” the spokesperson said in a statement. Paytm said the funds frozen ‘do not belong to the company’ and the entities being investigated are ‘independent merchants’.
The ED said HPZ Token ‘promised users of large gains by investing in mining machines for Bitcoin and other cryptocurrencies’. The ‘fraudsters’ lured the victims to invest in the company on the pretext of doubling their investment through the ‘HPZ Token’ app, the ED pointed out.
“Payments were received from users through UPI and other various payment gateways/nodal accounts/individuals,” the probe agency said.
While some amount was paid back to the investors, the remaining was diverted to various individual and company accounts through payment gateways/banks from where it was partly ‘siphoned off’ in digital/virtual currencies, the agency said. Sometime after this, the fraudsters stopped the payments and the website became inaccessible.
‘HPZ Token’ was operated by ‘Lillion Technocab Private Ltd’ and ‘Shigoo Technology Private Limited’. The latter was found ‘linked to various Chinese-controlled companies’, the ED said.
A ‘Razorpay’ spokesperson said they proactively blocked all suspicious entities who conducted illegal business through multiple payment gateways and banks about one-and-a-half years ago and have shared the details with authorities. “None of the funds which have been directed to be frozen belong to Razorpay,” the company said.
“We will continue to provide necessary information to authorities to assist in this investigation. We would like to reiterate that all our operations and onboarding processes adhere to the highest standards of governance and regulatory guidelines,” Razorpay informed.
Easebuzz said, “None of the parties mentioned in the ED’s statement belonged to our merchant base.”
These payment gateway firms came under the ED scanner in 2020 soon after the Covid-19 pandemic spread in India.