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Tag: ED

  • Bitcoin Scam: In a Money Laundering Investigation, the ED Seizes INR 10.63 Crore in Dubai Assets

    On February 17, the Enforcement Directorate (ED) temporarily seized INR 10.63 crore in real estate in accordance with the Prevention of Money Laundering Act (PMLA), 2002. The late Amit Bhardwaj is the owner of these assets. According to the agency’s statement on 19 February, the attached properties include commercial buildings situated in Dubai, the United Arab Emirates’ premier business districts.

    Following several FIRs against M/s Variable Tech Pte Ltd and a number of people, including the late Amit Bhardwaj, his family members Ajay, Vivek, Simpy, and Mahender Bhardwaj, as well as several MLM agents, the ED launched its investigation. The defendants allegedly promised a 10% monthly return in Bitcoin to gullible members of the public in exchange for significant sums of money in the form of Bitcoins. Investors were promised enormous returns in cryptocurrency assets, and the gathered Bitcoins were allegedly to be used for Bitcoin mining. The promoters, however, defrauded the investors and hid the illicitly obtained Bitcoins in hidden web wallets.

    Multiple Search Operations by ED

    The ED already carried out several search operations in connection with this investigation. Three people have been taken into custody: Nikhil Mahajan (arrested on January 16, 2023), Nitin Gaur (arrested on December 29, 2023), and Simpy Bhardwaj (arrested on December 17, 2023). In the same case, businessman Raj Kundra and his wife, actress Shilpa Shetty, had immovable and moveable properties valued at INR 97.79 crore seized by the ED. A bungalow in Pune, equity shares owned by Raj Kundra, and a residential unit in Juhu, Mumbai, registered in Shilpa Shetty’s name are among the attached assets. The famous couple contested these notices in the Bombay High Court, claiming that the ED had overreached itself and infringed upon their legal rights. The ED was ordered by the court to wait to issue the eviction notices until the couple appealed to the appellate body.

    ED’s Claims

    According to the ED, investors were expected to receive substantial returns on their cryptocurrency investments, and the gathered cryptocurrency was to be used for Bitcoin mining.However, according to the agency, the promoters defrauded the investors and were hiding the illicitly obtained Bitcoins in “obscure” online wallets. The ED has already arrested Simpy Bhardwaj, Nitin Gaur, and Nikhil Mahajan. The primary suspects, Ajay and Mahendra Bhardwaj, are still evading capture, according to the federal investigation agency. Since money obtained from the proceeds of crime has travelled outside, the ED has looked to other nations for assistance.

    Amit and Vivek Bhardwaj founded Variable Tech in Singapore in 2014, launching BitEx, a cryptocurrency exchange that offers Bitcoin mining contracts, according to the chargesheet filed by the Pune Police. A 10% monthly return on each investment for 18 months was promised under these contracts, and Bitcoin would be used for payout. The company’s scam resulted in the loss of 8,000 investors’ funds. On January 15, 2022, Amit Bhardwaj passed away from cardiac arrest.

    ED Seizes ₹1,646 Cr in Assets Linked to Global Crypto Scam
    The ED has seized ₹1,646 crore in assets as part of a global crypto fraud investigation, targeting money laundering and illegal transactions.
    StartupTalkyNitin Konde

  • ED Seizes INR 1,646 Cr in Assets Amid Global Crypto Scandal

    According to reports, the Enforcement Directorate (ED) made one of the largest seizures in a single search operation by an Indian agency, seizing assets valued at INR 1,646 Cr ($189.5 Mn). According to a media report, the operation was a component of a US-led probe into a $2.4 billion cryptocurrency “ponzi” scam that reportedly defrauded hundreds of investors across more than 40 nations. According to the report, which cited sources, the ED tracked Bitconnect founder and scandal mastermind Satish Kumbhani to Ahmedabad. Following his indictment in the scam by a US district court, where he was charged with operating a global Ponzi scheme under the guise of a Bitconnect loan scheme, Kumbhani fled into hiding.

    What Next?

    Kumbhani will soon be questioned by the ED and is probably going to be arrested, according to the report. There is a “look out circular” against him. The ED is seeking to return the proceeds of crime to the victims of the scandal, including overseas nationals, following the seizure of cryptocurrency assets on February 12. The BitConnect creator was charged by a grand jury in San Diego, California, in 2022 with “orchestrating” a global cryptocurrency Ponzi scam. In a court filing at the time, Richard Primoff, an attorney for the US Securities and Exchange Commission, stated that Kumbhani had moved from India to an unidentified address abroad.

    Modus Operandi

    In addition to running an unauthorised money transmission business and conspiring to commit international money laundering, Kumbhani was charged with conspiracy to commit wire fraud and price manipulation. Kumbhani asserted in 2016 that he had developed the BitConnect blockchain and started a lending operation with native tokens known as BitConnect Coins (BCC). According to reports, he tricked investors into funding his phoney cryptocurrency business by making unrealistically high returns. BitConnect’s market capitalisation peaked at $3.4 billion during its heyday.

    However, following cease-and-desist orders from North Carolina and Texas regulators, BitConnect shut down its exchange in January 2018. Glenn Arcaro, the director and promoter of BitConnect, entered a guilty plea in a federal court in September 2021 for his involvement in a large-scale conspiracy involving the cryptocurrency network.

    The most recent development coincides with certain significant controversies that have recently rocked the cryptocurrency industry. A security breach at the cryptocurrency exchange WazirX occurred in July of last year, resulting in the theft of $234 million worth of cryptocurrencies. In the meantime, in October of last year, Delhi Police and cryptocurrency exchange Binance teamed up to uncover a sophisticated scam run by a bogus organisation called “M/s Goldcoat Solar.” This resulted in several arrests and the confiscation of more than one lakh USDT in bitcoin assets.

    RBI Removes Restrictions on Online Customer Onboarding at Kotak Mahindra Bank
    The RBI has lifted restrictions on Kotak Mahindra Bank’s online customer onboarding, allowing the bank to resume digital account openings and other services.
    StartupTalkyNitin Konde

  • HPZ Token Scam: Fintechs Refute Claims of Account Freezing and ED Probes

    Prominent fintech companies, such as Paytm and PayU, have refuted claims that they are one of a few payment gateways under investigation by the Enforcement Directorate (ED) in connection with a cryptocurrency scam.

    In response to the account freezing reports, Paytm denied receiving any notice of this kind from the Enforcement Directorate. The company also confirmed that it has not received any new notices, communications, or enquiries from the Enforcement Directorate about the subject matter covered in the media articles. The published material is misleading and factually inaccurate, as per Paytm.

    Paytm went on to explain that the cases being covered by the media right now are related to similar previous enquiries about third-party merchants. Furthermore, it stated that Paytm would want to make it clear that these merchants are separate businesses and are not affiliated with its organisation. It attested to the company’s complete cooperation with the authorities and compliance with all of their directives, Paytm continued.

    In response to the reports, PayU also said that it strongly rejects any misrepresentations and that there are factual errors in the reports about PayU. PayU has consistently upheld the highest standards of governance and transparency in all of our activities and has remained dedicated to abiding by all applicable laws and regulations.

    ED Reportedly Frozen INR 500Cr

    A renowned media house has reported that the ED had frozen about INR 500 crore in virtual accounts of eight payment gateways, including Razorpay, PayU, Easebuzz, and Paytm, as part of its investigation into one of the biggest cryptocurrency scams in India, the HPZ Token scam, which was run by ten Chinese nationals and allegedly involved the collection of over INR 2,200 crore from investors across 20 states. WunderBaked, AgreePay, and SpeedPay were also allegedly involved.

    Company

    Amount Upheld by ED

    Easebuzz

    INR 33.4 crore

    Razorpay

    INR 18 crore

    CashFree

    INR 10.6 crore

    Paytm

    INR 2.8 crore

    PayU

    INR 130 crore

    Step by Step- How Scam was Piloted?

    Through the smartphone app HPZ Token, the accused reportedly persuaded others to invest in cryptocurrency mining, including Bitcoin. Through the incorporation of businesses in at least 20 states and the usage of more than 200 bank accounts, they ran a pan-Indian network. During the holding period, the ED used payment gateways to intercept the funds that were sent overseas.

     According to reports, the ED was investigating if the payment gateways notified the Financial Intelligence Unit and the Reserve Bank of India (RBI) and produced Suspicious Transaction Reports (STRs).

    Periodically, all financial institutions must submit STRs, which the RBI then forwards to the Financial Intelligence Unit for additional analysis. A Nagaland PMLA court on January 22, 2025, declared Bhupesh Arora, a major accused, a fugitive economic offender. After the ED started its investigation and disregarded a non-bailable warrant, Arora fled to Dubai in 2022. 298 participants in the scheme are named in the chargesheet.

    RBI Highlights Rising Consumption Driven by E-Commerce and Quick Commerce
    RBI highlights the impact of e-commerce and quick commerce on rising consumer spending and increasing consumption across India.
    StartupTalkyNitin Konde

  • ED Raids Flipkart and Amazon Merchants’ Offices

    A few sellers on Amazon and Walmart-owned Flipkart had their premises raided by the Enforcement Directorate (ED) on 7 November 2024 on suspicion of breaking the Prevention of Money Laundering Act (PMLA) and foreign investment standards.

    19 locations in New Delhi, Gurugram, Panchkula, Hyderabad, and Bengaluru were searched, according to official sources. According to various sources, among of the companies being investigated are Appario Retail, Shreyash Retail, Darshita Retail, and Ashiana Retail. This could not be independently confirmed, though.

    Why These Offices Have Been Raided?

    There have been accusations, according to sources, that these dealers have been importing goods from China by paying lower import taxes and rerouting them through other countries. Complaints about underinvoicing are also present. According to a media report, many vendors route their goods through other areas for quicker clearance because Chinese consignments are detained for extended periods of time at ports for security inspections. According to media sources, they might not be aware of all the facts because the searches were conducted on sellers rather than e-commerce companies.

    According to official sources, there have been multiple grievances from impacted parties alleging that e-commerce companies are favouring some sellers over others and even influencing product prices either directly or indirectly.

    Dos and Don’ts of FDI

    Companies like Flipkart and Amazon use the marketplace model since inventory-based e-commerce prohibits foreign direct investment (FDI). This indicates that they provide an online marketplace for vendors to sell their goods rather than maintaining their own stock. However, physical B2B stores run by Amazon and Flipkart also permit FDI. They sell goods to sellers through these businesses, and the vendors resell the goods on their platform.

    The government has implemented a few further restrictions to prevent any FDI violations. The marketplace platform, for example, is not permitted to own stock in seller entities. Additionally, no more than 25% of the products that vendors on their marketplace can source come from their B2B businesses. The merchants, not Flipkart or Amazon, must offer the discounts.

    According to official sources, ED examined documents from roughly six of these vendors and made copies of some of them. The Confederation of All India Traders (CAIT), meanwhile, applauded the ED’s move.

    CAIT and AIMRA Already Filled Petitioned to CCI

    The mainline mobile retailers’ group AIMRA and the CAIT had previously petitioned the CCI to immediately suspend Flipkart and Amazon’s operations, claiming that the companies were using predatory pricing and burning money to offer steep product discounts.

    This government is dedicated to making sure that the trading community cannot be harmed by anyone. CAIT Secretary General Praveen Khandelwal said, “We urge both the CCI and the ED to take swift action and prevent any further, irreparable damage to the businesses of small traders in response to multiple complaints filed by the trading community regarding FDI violations and the anti-competitive practices of quick-commerce companies such as Blinkit, Swiggy, and Zepto.”

    Amazon.in Launches Creator Central for Indian Content Creators
    Amazon India launches Creator Central, a new platform for content creators to grow, monetize, and engage with their audiences across Amazon’s network.
    StartupTalkyNitin Konde