Payment gateways under ED probe in crypto scam? Paytm, Razorpay reject reports – ‘Factually inaccurate’

Eight payment gateways, including Paytm, RazorPay, PayU, and Easebuzz, have come under the Enforcement Directorate (ED) scanner in connection with a ₹2,200 crore raised across 20 states and linked to 10 Chinese nationals in a cryptocurrency scam.

Chinese nationals were allegedly operating one of the biggest cryptocurrency scams from India, HPZ Token, The Times of India reported.

Modus Operandi

More than ₹2,200 crore was allegedly collected by the accused from 20 states in the country. The ‘proceeds of the crime’ were remitted out of the country, and a part of this amount was frozen in the payment gateways while being routed to beneficiaries. The amount stayed in the payment gateway till a day or two when bulk payments were made. It is during this process, the ED froze ₹500 crore.

Livemint could not independently verify the report.

Razorpay, Paytm reject allegations

Meanwhile,  Razorpay has denied the allegations and said that they have not received any new notices.

“The recent media news or reports suggesting Razorpay is under scrutiny by the Enforcement Directorate (ED) are factually inaccurate and misleading. We have not received any new notices, communications, or inquiries from the ED related to the issues referenced in these articles. Furthermore, we were not approached by the media for comment before the publication of these reports,” said Razorpay spokesperson.

“As a responsible and compliant corporate entity, we want to reiterate the fact that Razorpay has and will continue to hold ourselves to the highest level of governance and conduct.” the spokesperson added.

The ED is currently probing the matter by tracking the flow of funds and checking whether payment gateways have created suspicious transaction reports (STR). The agency has also alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU). It is mandatory for all financial institutions to prepare STR and submit it to RBI periodically. The central bank forwards this report to FIU for enforcement agencies to probe further.

The other payment gateways in connection to the case include WunderBaked, AgreePay and SpeedPay.

What is the scam about?

The accused operated the scam across 20 states by giving people the option to invest in the mining of cryptocurrencies, including Bitcoins, via the HPZ token mobile app. There are more than 50 companies registered in Delhi with 84 bank accounts, 37 bank accounts and 26 companies in Karnataka, while 19 companies in Haryana and 11 in Uttar Pradesh. The scamsters operated from Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, West Bengal and other states.

Responses from Paytm, PayU and RazorPay

Paytm has denied the allegations of the report and claimed it to be factually incorrect and misleading.

“We confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles. The information published is factually incorrect and misleading and we had not received any query from the media prior to the publishing of this news article,” Paytm said in an exchange filing.

PayU reached out to Livemint to deny such allegations.

“The investigations referenced in the recent media reports relate to events in 2022, for which we have fully cooperated with the Enforcement Directorate (ED) in the past,” a PayU spokesperson said.

“We were not approached by the media for any clarifications prior to the publication of any of these media reports. There are factual inaccuracies in the reports concerning PayU, and we strongly refute any misrepresentations. At PayU, we remain committed to complying with all applicable laws and regulations and continue to uphold the highest standards of governance and transparency in all our operations,” the spokesperson said. 

“The recent news reports suggesting Razorpay is under scrutiny by the Enforcement Directorate (ED) are factually inaccurate and misleading. We have not received any new notices, communications, or inquiries from the ED related to the issues referenced in these articles. Furthermore, we were not approached by the media for comment before the publication of these reports,” said the official spokesperson responding to LiveMint. 

As a responsible and compliant corporate entity, we want to reiterate the fact that Razorpay has and will continue to hold ourselves to the highest level of governance and conduct, according to the official spokesperson. 

Meanwhile, Easebuzz clarified that the matter does not concern the company.

“We would like to clarify that the investigation by the Enforcement Directorate concerning the highlighted matter has no direct connection to Easebuzz . The matter in relation to HPZ token is 2-3 years old and there are no pending queries at Easebuzz end from the authorities,” Easebuzz said in a statement.

“Additionally, we have not received any communication from the authorities regarding this case. Furthermore, we wish to emphasize that Easebuzz has consistently provided all necessary information to the relevant authorities as and when requested, and we have been commended by the authorities for our cooperation,” it added.