Indian Authority Freezes $46.4M From Crypto Lender Vauld Amid Money Laundering Investigation

Directorate of Enforcement (ED), a law enforcement agency focused on investigations of financial crimes in India, announced on Friday, the seizure of $46.4 million (equal to Rs 370 Crore) worth of funds from crypto lender Vauld, labeling them as “proceeds of crime derived from predatory lending practices.” 

ED Freezes $46.4M Fund Belonging to Vauld 

ED revealed in a statement that Flipvolt, a legal entity of Vauld in India, deposited the aforementioned amount into the custody of a private Indian company, Yellow Tune Technologies, via 23 entities. After tracing the funds sent to Yellow Tune for two days, ED was able to recover only $290,000 (equal to Rs 2.31 Crore) worth of funds from the private company.

Among several offenses of Flipvolt, ED accused the platform of having a “lax” know your customer (KYC) process, aiding the transfer of funds to foreign wallets without “reason/ declaration/ KYC”, and  “non-recording of transactions on Blockchains to save costs”.

After several attempts to make Flipvolt comply with the authority in giving information as to the whereabouts of the remaining funds, ED proceeded to confiscate other assets and properties in the custody of Flipvolt.

“. . . equivalent movable assets to the extent of Rs 367.67 Crore [$46.17 million] lying with Flipvolt Crypto-exchange in the form of Bank and Payment Gateway Balances worth Rs 164.4 Crore and Crypto assets lying in their pool accounts worth Rs 203.26 Crore, are frozen under PMLA, 2002, till complete fund trail is provided by the crypto-exchange.” the statement added.

Vauld Goes Bankrupt 

In July, the heat of the crypto market downtrend affected the parent company of Flipvolt, crypto lender Vauld, as it declared itself “financially incompetent,” and then halted withdrawals of users’ funds around the same time. 

Shortly thereafter, the Singapore-based lending platform signed an indicative term sheet with its rival crypto lender Nexo, which was targeted at the acquisition of the troubled lender.

It is also noteworthy that Vauld filed for six months of bankruptcy protection from its Singapore users while waiting for Nexo’s acquisition.