The Enforcement Directorate (ED) in India is investigating 8 major payment gateways, including Paytm, RazorPay, PayU, and Easebuzz, over their alleged involvement in a $25.5 million cryptocurrency scam linked to Chinese nationals.
The HPZ Token scam, which operated from India, was identified as one of the biggest cryptocurrency frauds that extended its reach across 20 states. Through the HPZ Token application, the accused entity obtained significant funds by luring individuals to participate in cryptocurrency mining operations, according to a report by Mint.
Money obtained in the scheme was transferred outside of India, and the ED placed freezing restrictions on these funds in payment gateway accounts. The investigation revealed that payment gateways froze $5.81 million while processing bulk transactions.
PayU maintained the largest share of frozen funds at $1.51 million, while Easebuzz held $387,000 and Razorpay possessed $208,000. The transactions involved multiple platforms, which included Paytm, Cashfree, WunderBaked, AgreePay, and SpeedPay.
The ED follows financial transactions while investigating whether payment gateways identified these transactions as potentially fraudulent. The agency sent notifications to both the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU) to continue their investigation.
The scam was carried out through more than 50 businesses operating from Delhi and Karnataka that executed the scam while the states of Maharashtra, Gujarat, and Uttar Pradesh joined their operations.
As part of its probe, the ED is tracing the flow of funds and examining whether the payment gateways submitted suspicious transaction reports (STR) to the RBI and the Financial Intelligence Unit (FIU).
The authorities are on high alert, and the case is a reminder of the risks associated with crypto investments in India.
Also Read: Indian Crypto Vendor Sentenced in Prison for Money Laundering
