As part of its investigation into one of India's biggest cryptocurrency scams, the HPZ Token scam, which was run by ten Chinese nationals, the Enforcement Directorate (ED) has frozen about Rs 500 crore in virtual accounts of eight payment gateways, including Razorpay, PayU, Easebuzz, and Paytm, according to a report by The Times of India. According to reports, the scam collected more than Rs 2,200 crore from investors in 20 different states.
Crypto scam: Approaches
The accused allegedly convinced people to invest in cryptocurrency mining, including Bitcoin, using the mobile app HPZ Token. They operated a pan-Indian network by using more than 200 bank accounts and incorporating companies in at least 20 states. Among the state-level operations were:
Delhi: 84 bank accounts and more than 50 businesses.
Karnataka: 37 bank accounts and 26 businesses.
West Bengal, Tamil Nadu, Gujarat, Maharashtra, and Uttar Pradesh were among the other states.
During the holding period, the ED used payment gateways to intercept the proceeds that were sent overseas.
Gateway-frozen funds
Large amounts were frozen by the ED from these payment platforms:
PayU: 130 crore rupees
Easebuzz: 33.4 crore rupees
Razorpay: 18 crore rupees
CashFree: 10.6 crore rupees
Paytm: 2.8 crore rupees
There were also claims of involvement from other platforms, including WunderBaked, AgreePay, and SpeedPay.
ED probe reports are denied by Paytm and PayU
In response to reports of account freezing, Paytm denied that the ED had sent them any such notice. "We certify that, with regard to the subject matter covered in the media articles, we have not received any such new notice, communication, or inquiry from the Enforcement Directorate. The published information is deceptive and factually inaccurate."
"There are factual inaccuracies in the reports concerning PayU, and we strongly refute any misrepresentations," PayU said in response to the reports. "At PayU, we're still dedicated to following all relevant laws and rules and maintaining the highest standards of governance and openness throughout our business operations."
Did the payment gateways play a role?
The ED is investigating whether the payment gateways notified the Financial Intelligence Unit and the Reserve Bank of India (RBI) and produced Suspicious Transaction Reports (STRs).
Periodically, all financial institutions must submit STRs, which the RBI then forwards to the Financial Intelligence Unit for additional analysis.
Economic offender accused
A Nagaland PMLA court on January 22, 2025, declared Bhupesh Arora, a key accused, a fugitive economic offender. After the ED started its investigation and disregarded a non-bailable warrant, Arora fled to Dubai in 2022. 298 participants in the scam are named on the chargesheet.
