Probe into Chinese loan apps: ED freezes Rs 46 cr kept in payment gateways

Easebuzz, Razorpay, Cashfree and Paytm impacted

The Enforcement Directorate on Friday froze funds worth over Rs 46 crore kept in several payment gateways, including Easebuzz, Razorpay, Cashfree and Paytm.

This action was in connection with its ongoing money laundering probe linked to alleged financial irregularities by instant app-based loan companies controlled by Chinese nationals.

The action follows fresh searches this week at premises linked to these payment gateway operators and some companies and operators engaged in loan-app transactions in multiple states.

“Huge balances were found to be maintained in virtual accounts of the involved entities with payment aggregators -- like Rs 33.36 crore was found with Easebuzz, Pune, Rs 8.21 crore with Razorpay Software, Bengaluru, Rs 1.28 crore with Cashfree Payments India, Bengaluru, and Rs 1.11 crore with Paytm Payments Services, New Delhi,” the ED stated.

The agency said that it has carried out searches at six business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow, and Gaya, and 16 other premises of banks and payment gateways branches and offices in Delhi, Gurugram, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur, and Bengaluru in connection with an investigation related to the app-based token named HPZ and related entities.

The HPZ Token was an app-based token that promised users of large gains against investment by investing in mining machines for bitcoin and other cryptocurrencies, according to the ED. “The modus operandi of fraudsters was to first lure victims to invest in the company on the pretext of doubling their investment through the app HPZ Token,” the ED said.

It said the payments were received from users through UPIs and other various payment gateways and nodal accounts, or individuals.

A part amount was paid back to investors, and the remaining was diverted to various individual and company accounts through different payment gateways and banks, from where partly it was siphoned off in digital or virtual currencies, the ED pointed out.

Subsequently, these fraudsters stopped payments and the website became inaccessible.

The investigation further revealed that the HPZ Token was operated by Lillion Technocab and Shigoo Technology, it said. “Shigoo Technology was also found linked to various Chinese controlled companies,” the investigation agency said.

It was also revealed that various other companies were indulged in receiving funds from the public on the pretext of operating apps and websites for gaming, loan, and other activities.

The ED suspected Jilian Consultants’ links with various companies involved in such fraud.

One such entity, Mad-Elephant Network Technology, in agreement with X10 Financial Services, was operating various loan apps (Yo-Yo cash, Tufan Rupees, Coco cash, etc.).

Similarly, Su Hui Technology, in agreement with Nimisha Finance India Private Limited, operated loan apps.

Notably, the federal agency is investigating cases of NBFCs allegedly indulging in predatory lending practices. During the probe it emerged that many such companies had wind up shop and diverted funds through fintech companies, to buy crypto assets which were then laundered abroad.

Subsequently, the ED searched premises associated with crypto exchange WazirX and froze Rs 64 crore in its accounts. The search revealed that some entities — controlled and operated by Chinese individuals — had been using forged documents of Indians to appoint them dummy directors of those entities.