 "HPZ Token scam: Fintechs deny reports of ED probe, freezing of accounts")
This report has been updated.
Major fintechs including Paytm and PayU have denied reports that the Enforcement Directorate (ED) is investigating them among a few payment gateways in a crypto scam.
Responding to the reports on account freezing, Paytm denied receiving any such notice from the ED, "We confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles. The information published is factually incorrect and misleading."
"The instances currently being reported by the media pertain to similar old enquiries regarding third-party merchants. We would like to clarify that these merchants are independent entities and are not part of our group. We confirm that we had fully cooperated with the authorities and had complied with all their directive," added Paytm.
PayU also addressed the reports, stating, "There are factual inaccuracies in the reports concerning PayU, and we strongly refute any misrepresentations. At PayU, we remain committed to complying with all applicable laws and regulations and continue to uphold the highest standards of governance and transparency in all our operations."
A spokesperson from Razorpay also told Business Standard, "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."
Ed freezes Rs 500 cr in virtual accounts
Reports claimed that the (ED) had frozen approximately Rs 500 crore in virtual accounts of eight payment gateways, including Razorpay, PayU, Easebuzz, and Paytm, as part of its investigation into one of India’s largest cryptocurrency scams, the HPZ Token scam, operated by 10 Chinese nationals. According to a report by The Times of India. The scam reportedly involved the collection of over Rs 2,200 crore from investors across 20 states. The ED frozen significant sums from these payment platforms:
- PayU: Rs 130 crore
- Easebuzz: Rs 33.4 crore
- Razorpay: Rs 18 crore
- CashFree: Rs 10.6 crore
- Paytm: Rs 2.8 crore
Other platforms such as WunderBaked, AgreePay, and SpeedPay were also allegedly involved.
Crypto scam: Modus operandi
The accused allegedly encouraged individuals to invest in cryptocurrency mining, including Bitcoin, through the mobile app HPZ Token. They operated a pan-India network, incorporating companies in at least 20 states, and used over 200 bank accounts to channel funds. State-wise operation included:
- Delhi: Over 50 companies with 84 bank accounts.
- Karnataka: 26 companies with 37 bank accounts.
- Other states included Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, and West Bengal.
The proceeds were remitted abroad but were intercepted by the ED during the holding period with payment gateways.
Were the payment gateways involved?
Reports claimed that the ED was scrutinising whether the payment gateways generated Suspicious Transaction Reports (STRs) and alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit.
All financial institutions are required to periodically file STRs, which are forwarded by the RBI to the Financial Intelligence Unit for further investigation.
Accused economic offender
A key accused, Bhupesh Arora, was declared a fugitive economic offender by a PMLA court in Nagaland on January 22, 2025. Arora fled to Dubai in 2022 after the ED began its probe and ignored a non-bailable warrant. The chargesheet names 298 individuals involved in the scam.
Business Standard was not able to independently verify the report.