On Thursday, reports underlined that the Indian Enforcement Directorate (ED) blocked bank assets worth Rs 370 crore (around $46 million) that belonged to the troubled crypto exchange Vauld.
The news came a week after ED froze the bank account of one of the directors of Zanmai Lab Private Ltd, the operator of the Indian cryptocurrency exchange WazirX. The development also comes amid an ongoing investigation of at least 10 crypto exchanges by the Indian agency for an alleged money laundering of over $125 million.
Chinese loan apps reported beneficiaries of laundering
According to the release, Vauld’s local entity under Flipvolt Technologies was used by 23 predatory fintech and non-banking organizations to deposit millions in question into wallets under Yellow Tune Technologies’ control. In a similar case, WazirX had allegedly assisted 16 accused fintech firms in using the cryptocurrency channel to launder criminal proceeds of illicit loan apps.
The agency claimed that Vauld’s Indian entity has very lax know-your-customer (KYC) norms, no enhanced due diligence (EDD) mechanism, no check on the depositors’ sources of funds, and no mechanism of raising Suspicious Transaction Reports (STRs) among other issues.
Additionally, searches at various locations of M/s Yellow Tune Technologies Private Limited were made from August 8 to August 10, 2022, by the agency, in an effort to identify the recipients’ wallets and the company’s beneficial owners. However, ED stated, “But the company’s promoters are untraceable. It is found that this shell entity was incorporated by Chinese Nationals Alex and Kaidi (real name not known)…”
Vauld allegedly flouted AML regulations
Notably, the Singapore-based Vauld had halted deposits, trading, and withdrawals on its platforms in July after announcing layoffs amid a market downturn. Now, the platform is accused of assisting “the accused fintech companies in avoiding regular banking channels,” to “take out all the fraud money in the form of crypto assets.” The platform is now essentially put to trial for playing an active role in the laundering by “encouraging obscurity and having lax AML [anti-money laundering] norms.”
In a response to Business Today, Vauld responded, “We are investigating this matter, we kindly request your patience and support, we will keep you updated as soon as we have more information on this.”