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India freezes Peter Thiel-backed Vauld’s crypto and banking assets worth $46 million – Regulation Bitcoin News
India’s Enforcement Directorate (ED) has frozen crypto exchange Vauld’s crypto and banking assets worth around INR 370 crore ($46,439,181). Vauld stopped deposits and withdrawals last month. The Indian law enforcement agency is reportedly investigating more than 10 cryptocurrency exchanges.
Indian authorities freeze assets of another cryptocurrency exchange
The Enforcement Directorate (ED), a law enforcement and financial intelligence agency of the Government of India, has frozen the assets of another cryptocurrency exchange.
The agency announced on Friday that it has conducted searches at various premises of Yellow Tune Technologies in Bangalore and has issued an order to freeze the bank balances, payment gateway balances and crypto balances of Flipvolt Technologies’ crypto exchange worth a total of 370 crore rupees ($46,439. 181) of assets. Flipvolt Technologies is the India-registered unit of Singapore-headquartered Vauld, a cryptocurrency trading, borrowing and lending platform.
The ED explained that approximately 370 crore rupees were deposited by 23 entities in the INR wallets of Yellow Tune Technologies held with Flipvolt Technologies’ crypto exchange. These amounts were “proceeds of crime derived from predatory lending practices,” the authority said, elaborating:
Yellow Tune using the assistance of Flipvolt crypto exchange … helped the accused fintech companies avoid regular banking channels, and easily managed to withdraw all the fraud money in the form of crypto assets.
The agency alleged that Flipvolt “has very lax KYC [know-your-customer] norms, no EDD [enhanced due diligence] mechanism, no check on the source of funds to the depositor, no mechanism to raise STR [suspicious transaction reports].”
In addition, Flipvolt failed to provide the complete trace of crypto transactions made by Yellow Tune Technologies and could not provide any form of KYC from counterparty wallets, the ED noted.
The authority concluded that “by encouraging ambiguity and having relaxed the AML [anti-money laundering] norms,” the crypto exchange “has actively helped Yellow Tune launder the proceeds of crime worth 370 crore rupees using cryptocurrency,” adding:
Therefore, corresponding movable assets to the extent of Rs 367.67 crore held by Flipvolt crypto exchange in the form of bank and payment gateway balances worth Rs 164.4 crore and crypto assets held in their pool accounts worth Rs 203.26 crore are frozen till 20002 complete fund track is provided by the crypto exchange.
Vauld’s website explains that “As soon as a user deposits money to the Vauld wallet, it goes to a centralized pool.” From this pool, the funds are set aside for lending and trading. PMLA, 2002 is India’s Prevention of Money Laundering Act.
The crypto exchange told Businesstoday: “We are investigating this matter, we ask for your patience and support, we will keep you updated as soon as we have more information on this.”
After halting deposits and withdrawals last month, Vauld announced a restructuring plan on July 4 due to “financial challenges” it has faced in recent months. Defi Payments Pte Ltd., the entity that operates Vauld in Singapore, also sought injunctive relief against legal proceedings brought against it. The exchange is not currently licensed in Singapore.
In July last year, Vauld raised $25 million in a Series A funding round for its India-based borrowing and lending platform. The round was led by Valar Ventures, a US-based venture capital fund co-founded by billionaire Peter Thiel. Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos, Robert Leshner, Cadenza Capital and others also participated in the round.
Last week, the ED announced that it has frozen the bank funds of Wazirx, a major crypto exchange in India. The authority described that it conducted searches on one of the directors of Zanmai Labs, which owns Wazirx, and issued an order to freeze the exchange’s bank balance worth INR 64.67 crore.
The ED similarly explained that the action against Wazirx is part of a money laundering investigation involving non-bank finance companies (NBFCs) and their fintech partners for “predatory lending practices in violation of the RBI [Reserve Bank of India] guidelines.”
Additionally, the Economic Times reported on Thursday that the ED is investigating at least 10 cryptocurrency exchanges for allegedly laundering more than INR 1,000 crore. The crypto trading platforms allegedly did not perform adequate due diligence and failed to submit suspicious transaction reports.
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