ED Takes Action: Frozen Accounts and Financial Reckoning
In a bombshell announcement that sent shockwaves through the crypto community, India’s Directorate of Enforcement (ED) disclosed on Friday that it has frozen the accounts of Yellow Tune Technologies. This Bengaluru-based financial services provider had some of its assets tied to the Flipvolt crypto exchange, which is the Indian arm of the Singaporean Vauld. The ED’s icy gesture comes on the heels of an extensive investigation into allegations of money laundering connected to quick-cash loan companies with ties to China.
A Shell Game Exposed
After an in-depth investigation, the ED concluded that Yellow Tune is little more than a facade, a shell entity operated by two Chinese nationals who opted for the delightful route of pseudonyms. Consequently, the financial sleuths froze Yellow Tune’s bank balances, payment gateway balances, and Flipvolt exchange wallets, totaling a hefty 3.7 billion rupees, or around $46.4 million. Talk about making a splash in the financial pool!
Uncovering the Money Trail
The ED didn’t stop there; they uncovered a network of 23 entities that funneled funds into Yellow Tune’s wallets at Flipvolt. Those funds were then wickedly transferred to foreign wallets. In a scathing critique, the ED slammed Flipvolt’s oversight of these funds, stating:
“Lax KYC 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.”
Consequences of Negligence
With the cloak of anonymity disappearing, the ED has cited India’s Prevention of Money Laundering Act of 2002 to justify the freezing of Flipvolt’s funds, which are equivalent to the sums transferred out of Yellow Tune’s wallets to overseas entities. The ED describes these funds as “nothing but proceeds of crime derived from predatory lending practices.”
The Ripple Effect on Vauld and Beyond
This is just another nail in the coffin for Vauld, which has already weathered tumultuous storms. The Singapore-based exchange previously downsized its workforce by 30% in June and, following a withdrawal freeze in July, sought creditor protection under a three-month moratorium reminiscent of U.S. Chapter 11 bankruptcy proceedings.
The Broader Context: A Regulatory Backlash
The saga continues as the ED remains vigilant. Earlier this week, it also froze around $8.1 million held by cryptocurrency exchange WazirX and is investigating at least nine other exchanges with links to Chinese-backed instant loan companies. As the investigation unfolds, it’s clear that the ED is sharpening its regulatory tools amidst the crypto chaos.
