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 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.