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Vauld Pursues Legal Counsel After ED Issues Asset Freeze Order

2 mins
Updated by Ryan James
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In Brief

  • Singaporean lender beefs up legal clout as ED issues freeze order against some of its assets.
  • It's Indian entity has been accused of helping several firms send money to an alleged Chinese company.
  • The company claims that its KYC checks were sufficient.
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Singaporean crypto lender Vauld bristles as the Indian Enforcement Directorate (ED) issues a freezing order in connection with an ongoing money laundering case.

Vauld claims the freezing order hurts all the more because the Singapore-based lender claims it complied with the law enforcement’s summons requesting documents and information.

Vauld is one of ten crypto exchanges with alleged Chinese connections that have come under scrutiny from Indian authorities for aiding in laundering Rs 1000 crore. The firms, including the Indian crypto exchange WazirX, are suspected of laundering funds for various predatory fintech companies that used the exchanges to purchase Rs 100 crore for transmission to overseas wallets. The ED claims that the crypto companies did not perform adequate Know-Your-Customer checks or keep suspicious transaction records (STRs). A person familiar with the matter said the lack of regulation provided a cloak for companies laundering money to move their assets overseas. In many cases, transactions were traced to people living in isolated areas.

The CEO of WazirX, Nischal Chetty, recently exchanged blows online with Binance CEO Changpeng ‘CZ’ Zhao over the exchange’s ownership.

The ED recently froze bank accounts of WazirX, holding Rs 65.67 Crore. Now it turns its attention to embattled lender Vauld.

Vauld lawyers up

According to Vauld, the ED has ordered the freezing of Rs 2040 million from “pool wallets” in connection with a single customer whose account has been deactivated. Vauld’s Indian entity Flipvolt Technologies was allegedly used by 23 companies to siphon funds into wallets owned by Yellow Tune Technologies, a Chinese company whose founders are untraceable.

 Compliant with strict KYC regulations, Vauld has respectfully disagreed with the ED’s request and is seeking legal counsel. Protection of customer and stakeholder assets is paramount, the company said.

It has committed to working with the ED in the future.

A tough six weeks for Vauld

 Vauld, backed by Peter Thiel’s Valar Ventures and U.S. exchange Coinbase, suspended withdrawals, deposits, and trading on its platform on July 4 due to uncertain market conditions after users withdrew $200 million. Staff was also cut by 30%. It engaged with lawyers shortly after to explore a restructuring option. A day later, Nexo, a lending platform, offered to buy the company, signing a term sheet giving it 60-days to complete the purchase.  

On July 8, 2022, the company announced an application for a moratorium order in Singapore to create room for the restructuring process. Similar to filing for Chapter 11 Bankruptcy under U.S. law, the moratorium allowed the company to continue operating without fear of liquidation.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...