Vauld Assets Worth $46 Million Frozen by Indian Authorities

Assets worth about $46 million that belonged to Vauld have been frozen by India’s Enforcement Directorate. In a money laundering investigation, the agency is looking into the crypto lender and one of its clients.

The troubled cryptocurrency lender Vauld has had its assets frozen by the law enforcement organization that looks into financial crimes. The assets are valued at 3.7 billion rupees (roughly $46 million).

According to a statement released on Friday, the ED investigated Yellow Tune Technologies, an Indian business that was a client of Vauld’s Indian company, Flipvolt Technologies, and discovered that it was connected to a case of money laundering. Chinese loan apps that participated in digital lending in India are connected to the case.

Since 2019, the majority of Chinese businesses have reportedly been using fintech apps to expand into the lending market in India. However, because the RBI did not grant them an NBFC license, they have had to enter into agreements with regional 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 continued by claiming that Yellow Tune Technologies and Flipvolt had assisted the accused fintech companies in evading traditional banking channels and withdrawing all of the fraudulent money in the form of cryptocurrency assets.

Vauld maintains lax know-your-customer (KYC) and anti-money laundering (AML) processes, according to the ED, which also claimed that Vauld failed to provide the full trail of crypto transactions made by Yellow Tune Technologies. ED stays

“By encouraging obscurity and having lax AML norms, it has actively assisted M/s Yellow Tune in laundering the proceeds of crime worth Rs 370 Crore using the crypto route. Therefore, equivalent movable assets to the extent of Rs 367.67 Crore 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 move by ED is the latest setback for Vauld, which last month stopped client withdrawals and owes its creditors a total of $402 million, according to a previous report. 90% of that total, or $363 million, comes from deposits made by individual retail investors.

Vauld has requested protection against creditors. It was given three months by the Singapore High Court earlier this month to continue considering its options. Vauld now has until November 7 to decide on its next steps.

Rival Nexo is currently conducting due diligence on Vauld in preparation for a possible acquisition deal. Given these most recent developments, it is still unclear whether the deal will be completed.

This is ED’s second recent action in the cryptocurrency space. The local cryptocurrency exchange called WazirX had bank balances worth 647 million rupees frozen by the Indian law enforcement agency last week.

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