Indian authorities have frozen around ₹500 crore (approximately $60 million) in virtual accounts linked to several prominent payment gateways, including Paytm, Razorpay, PayU, and Easebuzz.
This is in connection with one of the largest cryptocurrency scams ever uncovered in the country.
The Enforcement Directorate (ED) has been tracking a sophisticated operation involving Chinese nationals, which allegedly defrauded investors across 20 Indian states.
The scam revolves around the HPZ Token, a mobile app promising lucrative returns from cryptocurrency mining.
The operation reportedly defrauded investors of over ₹2,200 crore (roughly $264 million).
The accused, consisting of 10 Chinese nationals, had set up numerous companies and bank accounts across India to run this fraudulent venture.
By offering high returns on investments in mining Bitcoin and other cryptocurrencies, they lured unsuspecting investors, many of whom believed they were participating in a legitimate venture.
The companies registered in various states, including Delhi, Maharashtra, Karnataka, and Uttar Pradesh, were part of a massive network of deceit.
The ED is currently investigating a total of 84 bank accounts in Delhi alone, in addition to several others spread across multiple states such as Gujarat, Andhra Pradesh, and West Bengal.
As part of their crackdown, the ED froze funds from multiple payment gateways involved in processing transactions linked to the scam.
PayU had the highest amount frozen at ₹130 crore (approximately $15.5 million), followed by ₹33.4 crore (about $4 million) with Easebuzz, ₹18 crore (around $2.1 million) with Razorpay, and smaller amounts with CashFree and Paytm.
These gateways are now under scrutiny to determine whether they followed proper protocols in reporting suspicious transactions to the Reserve Bank of India (RBI).
The ED is particularly focused on checking whether these payment providers generated Suspicious Transaction Reports (STRs) as required by law.
These reports are intended to alert authorities to potentially illicit activities.
However, sources indicate that the authorities have not received conclusive evidence to suggest that these gateways properly flagged the suspicious transactions.
The fraudsters are said to have planned to remit the “proceeds of crime” out of India, transferring substantial sums to beneficiaries abroad.
However, a significant portion of this money was intercepted when it remained temporarily in the virtual accounts of payment gateways before being remitted overseas.
The ED’s efforts have managed to freeze a portion of this money, disrupting the flow of illicit funds.
An anonymous ED official revealed,
"The amount stayed with these payment gateways for a short period during bulk payments. In that window, we were able to freeze the funds."
This critical timing allowed authorities to halt the scam’s progression and prevent further damage.
The investigation has also led to the identification of key individuals behind the operation.
On 22 January, a court in Nagaland declared Bhupesh Arora, a Delhi-based individual, and his associates as fugitives.
Arora is accused of masterminding the scam and is believed to have been operating the fraudulent companies.
Despite a non-bailable arrest warrant, he failed to appear before the ED.
The case has drawn attention due to the scale of the fraud and the involvement of foreign nationals, underscoring the global nature of such cybercrime operations.
The ED’s investigation continues, with the authorities working closely with international partners to track the money trail and apprehend those responsible.
The ED’s investigation reveals that the accused set up over 50 companies across Delhi, with additional shell companies registered in states like Haryana, Uttar Pradesh, and Karnataka.
These companies opened numerous bank accounts, facilitating the laundering of illicit money and the routing of funds to international destinations.
This multi-layered operation leveraged the anonymity and speed of cryptocurrency transactions to carry out the scam and evade detection.
Authorities are examining these companies' operations and financial activities to gather further evidence and trace the flow of illicit funds.
The probe is ongoing, with authorities committed to bringing those involved in this massive fraud to justice.
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