Indian authorities freeze $46 million worth of Vauld's assets

Quick Take

  • India’s Enforcement Directorate has frozen fiat and crypto assets worth around $46 million belonging to Vauld.
  • The agency is probing the crypto lender and one of its clients in a money laundering case.

India's Enforcement Directorate (ED), a law enforcement agency that investigates financial crimes, has frozen assets worth 3.7 billion rupees (around $46 million) belonging to Vauld, a troubled crypto lender.

ED conducted searches on an Indian company called Yellow Tune Technologies and found that this company, a client of Vauld's Indian entity Flipvolt Technologies, was involved in a money laundering case, according to a statement on Friday. The case is linked to Chinese loan apps that were involved in digital lending in India.

Since 2019, most Chinese companies were reportedly entering India for lending business by establishing fintech apps, but as the Reserve Bank of India (RBI) was not giving them a non-banking financial company (NBFC) license, they were making agreements with local NBFCs.

"While doing fund trail investigation, ED found that large amount of funds to the tune of Rs 370 Crore were deposited by 23 entities including accused NBFCs and their fintech companies into the INR wallets of M/s Yellow Tune Technologies Private Limited held with Crypto Exchange M/s Flipvolt Technologies Private Limited. These amounts were nothing but proceeds of crime derived from predatory lending practices," ED said.

It went on to say that Yellow Tune Technologies — with assistance from Flipvolt — helped accused fintech companies in avoiding regular banking channels and taking out all the fraud money in the form of crypto assets.

ED further said that Vauld failed to provide the complete trail of crypto transactions made by Yellow Tune Technologies and that it maintains lax know-your-customer (KYC) and anti-money laundering (AML) processes.

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"By encouraging obscurity and having lax AML norms, it has actively assisted M/s Ye