ED probes Paytm, Razorpay, others over crypto scam worth ₹2,200cr
What's the story
India's Enforcement Directorate (ED) is now investigating some of the most popular payment gateways, including Paytm, Razorpay, PayU, and Easebuzz. The probe focuses on their alleged role in a massive cryptocurrency scam run by 10 Chinese nationals via the HPZ Token app, according to The Times of India. As part of the investigation, the ED has frozen around ₹500 crore in these companies' virtual accounts over the last two years.
Scam details
Scam involved cryptocurrency mining investments across 20 states
The alleged fraudsters are accused of duping people across 20 Indian states, collecting over ₹2,200 crore and transferring the proceeds abroad. A portion of this money, around ₹500 crore, was frozen by ED while it was held with payment gateways for 1-2 days before being sent. The ED's investigation revolves around tracing the money trail and ascertaining if payment gateways had generated suspicious transaction reports (STRs), and alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU).
Frozen assets
Breakdown of frozen funds in payment gateways' accounts
Of the total ₹497 crore frozen in the virtual accounts of payment gateways, PayU held the largest share at ₹130 crore. It was followed by Easebuzz with ₹33.4 crore, Razorpay with ₹18 crore, CashFree with ₹10.6 crore, and Paytm with ₹2.8 crore. Other payment gateways where ED has frozen alleged scam money include WunderBaked, AgreePay, and SpeedPay.
Scam operations
Cryptocurrency scam operated through companies across India
The alleged culprits ran a nationwide racket with companies registered in at least 20 states. Investors were promised the chance to invest in cryptocurrency mining, including Bitcoins, through the HPZ Token mobile app. More than 50 companies were registered in Delhi alone, with many others across states like Karnataka, Haryana, Uttar Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, and West Bengal.
Fugitive offender
ED declares Delhi resident as fugitive economic offender
In related developments, a PMLA court in Nagaland declared Bhupesh Arora, a Delhi resident, a fugitive economic offender on January 22. The declaration came after Arora failed to appear before the agency despite a non-bailable warrant against him. The ED alleges Arora fled to Dubai in 2022 when the investigations into the scam began.
Update
Paytm denies ED probe in the matter
Paytm has refuted claims of being investigated by the ED in connection with the scam. In a stock exchange filing, the company stated, "We confirm that we have not received any new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in media reports." The company further called the reports "factually incorrect and misleading." Paytm shares dropped as much as 9% during Friday's session, hitting a low of ₹773.90 before recovering slightly.
Twitter Post
Take a look at Paytm's post
Clarifying media reports: There is no new ED search or probe. Please refer to our stock exchange filing for details: https://t.co/wu21hgOTRP pic.twitter.com/8KmfjVv0b2
— Paytm (@Paytm) January 24, 2025