Crypto exchange Vauld had its bank and crypto assets frozen by the Enforcement Directorate (ED) in India worth almost INR 370 crore, or $46 million.
The crypto exchange had halted withdrawals in the previous month. More than 10 crypto exchanges are reportedly being investigated by the Indian law enforcement authority.
Crypto exchanges under investigation
The economic intelligence and law enforcement agency of the Indian government, the Enforcement Directorate (ED) has frozen the bank and crypto assets of yet another exchange.
On Friday, the agency announced that it was conducting searches of the different premises in Bangalore of Yellow Tune Technologies.
Moreover, it also said that an order had been issued for freezing the crypto, payment gateway, and bank balances of crypto exchange Flipvolt Technologies, valued at close to $46 million.
Vauld is headquartered in Singapore, and its entity registered in India is recognized by the name of Flipvolt Technologies. It is a crypto lending, trading, and borrowing platform.
According to ED, almost 23 entities had deposited around INR 370 crores in Yellow Tune Technologies’ wallets that were held with the crypto exchange Flipvolt Technologies.
The authority elaborated that the funds had been generated via criminal activities associated with predatory lending practices.
The allegations
ED said that Yellow Tune had assisted fintech companies in using the crypto exchange Flipvolt Technologies for steering clear of regular banking channels.
It said that the companies had been able to get their fraudulent money in crypto form. According to the allegations of the ED, there are numerous problems with Flipvolt.
It has been accused of having lax KYC policies and not checking the depositor’s source of funds.
In addition, Flipvolt lacks an improved due diligence (EDD) mechanism as well as one for raising doubtful transaction reports (STRs).
Apart from that, Flipvolt had also been unable to provide a proper trail of Yellow Tune Technologies’ crypto transactions and was unable to provide any KYC for the wallets of the opposite party.
The decision
ED concluded that since its AML (Anti-money laundering) policies had been lax, they had encouraged obscurity.
This meant that the crypto exchange had facilitated Yellow Tune in laundering money valued at 370 crores in crypto assets.
Hence, in accordance with PMLA, 2002, the authority had decided to freeze the 367.67 crores in payment gateway and bank balances of Flipvolt crypto exchange.
Furthermore, they had also frozen crypto assets of the exchange in their pool accounts that were valued at 203.26 crores until the crypto exchange provided a full trail.
According to the Vault website, all deposits made by clients in their wallets are added to a centralized pool, and funds are then allocated for trading and lending.
The crypto exchange stated that they were looking into the matter and called for support and patience until they could share an update.
Vauld had cited ‘financial challenges’ for halting withdrawals and announced a restructuring plan. The entity operating Vauld in Singapore, Defi Payments Pte Ltd had also obtained court protection from legal action.
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