The Indian Enforcement Directorate (ED) has frozen the crypto and bank assets of troubled crypto lender Vauld, to the tune of INR 370 crore ($46 million). The crypto firm halted withdrawals and deposits in July.
The ED, a law enforcement and economic intelligence agency of the Indian government, announced on August 12 that it conducted searches at the premises of Yellow Tune Technologies in Bangalore and issued a directive to freeze its bank balances, payment gateway balances, and the crypto balances of Flipvolt Technologies’ crypto exchange totaling $46 million. Flipvolt Technologies is the Indian registered arm of Singapore-headquartered Vauld.
The authority explained that 370 crore rupees were deposited by 23 different entities into the INR wallets of Yellow Tune Technologies held by Flipvolt Technologies’ crypto exchange. The assets were “proceeds of crime derived from predatory lending practices,” according to the authority. It further stated,
Yellow Tune by using the assistance of Flipvolt crypto exchange … assisted the accused fintech companies in avoiding regular banking channels, and managed to easily take out all the fraud money in the form of crypto assets.
The ED is alleging that Flipvolt:
Has very lax KYC [know-your-customer] norms, no EDD [enhanced due diligence] mechanism, no check on the source of funds of the depositor, no mechanism of raising STRs [suspicious transaction reports].
Flipvolt also failed to give the complete trail of crypto transactions made by Yellow Tune and was not able to provide any form of KYC of the opposite party wallets.
The ED added that “by encouraging obscurity and having law AML [anti-money laundering] norms,” the exchange “has actively assisted Yellow Tune in laundering the proceeds of crime worth 370 crore rupees using cryptocurrencies.” It added,
Therefore, equivalent movable assets to the extent of Rs 367.67 crore lying with Flipvolt crypto exchange in the form of bank and payment gateway balances worth Rs 164.4 crore and crypto assets lying in their pool accounts worth Rs 203.26 crore are frozen under PMLA, 2002, till complete fund trail is provided by the crypto exchange.
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