India’s Directorate of Enforcement (ED) has frozen the accounts of Bengaluru-based financial services firm Yellow Tune Technologies, including those held by Flipvot cryptocurrency exchange, which is the Indian branch of Singaporean Vauld.
The ED continues its onslaught on money laundering allegations
The move is part of the ongoing probe into money laundering by China-connected instant loan firms. This will be the second time in a week that the agency has been taking action in the cryptocurrency sector in connection with the money laundering allegations.
After establishing that Yellow Tune was a shell firm formed by two Chinese citizens using aliases, the financial watchdog declared it was freezing the firm’s account balances, payment gateway accounts, and balances in the Flipvolt crypto for a combined amount of 3.7 billion rupees, or $46.4 million. Newspaper reports claim that the ED spent three days searching locations connected to Yellow Tunes.
The ED discovered 23 organizations that had put money into Yellow Tune’s Flipvolt wallets before sending it elsewhere. The ED gave Flipvolt harsh criticism for how the company handled the money.
The agency said, “Lax KYC [Know Your Customer] norms, loose regulatory control of allowing transfers to foreign wallets without asking any reason/declaration/KYC, non-recording of transactions on Blockchains to save costs etc, has ensured that Flipvolt is not able to give any account for the missing crypto assets. It has made no sincere efforts to trace these crypto assets.”
The ED froze money it moved from Yellow Tune’s overseas accounts
The ED froze money in Flipvolt’s accounts equal to the amounts it moved from Yellow Tune’s accounts to overseas wallets, citing India’s Prevention of Money Laundering Act of 2002, until the entire fund trail was supplied by the crypto-exchange. These monies were described as nothing but criminal proceeds resulting from exploitative lending practices.
The most recent piece of bad information for Vauld is the seizure of the Flipvolt funds. The Singaporean exchange reduced its workforce by 30% in June and stopped account withdrawals at the start of July. Late last month, it turned to Singapore for defense against its creditors.