Enforcement Directorate Freezes Vauld’s Assets Worth $46.4M


India’s enforcement watchdog, Enforcement Directorate (ED) has frozen financial assets that belong to Vauld in its country.

Vauld is one of the troubled crypto lenders that has suspended withdrawals on its platform. The frozen assets are worth 3.7 billion rupees which is equivalent to $46.4 million. Based on a statement issued earlier today, the exchange’s wallet contains proceeds from a criminal lending operation. 

FlipVolt cryptocurrency exchange which is Vauld’s legal identity in India had most of its assets ceased. This was a combination of assets from the bank, its payment gateway, and crypto balances. 

From investigations, it was discovered that about 23 entities had deposited their loot into wallets belonging to Yellow Tune Technologies. Some of these entities are Indian Non-Banking Financial Company (NBFC) companies including their fintech partners.

Important to realize is that Flipvolt exchange hosts the Yellow Tune Technologies wallets. The owners of the wallets could not be traced, but are suspected to be Chinese nationals identified as Alex and Kaidi. 

“No Appropriate KYC or EDD Procedures”, Says Enforcement Directorate

Without delay, ED approached the crypto exchange for clarification. Flipvolt exchange was unable to present any document showing that know-your-customer (KYC) procedures were conducted. Additionally, the complete track showing the passage of transactions between the exchange and the fintech companies was unavailable.

Therefore, the transactions and the missing cryptocurrencies could not be accounted for. According to ED, Flipvolt/Vauld’s slack KYC procedure, and a lack of enhanced due diligence (EDD) mechanism led to this offense.

Also, Flipvolt carried out no check on the source of funds deposited by these NBFCs. No suspicious transaction report (STR) was raised. All of these loopholes encouraged the fintech companies to evade bank regulations and convert their loot to digital assets. 

Given these points, it is noted that Flipvolt has “actively assisted Yellow Tune in laundering the proceeds of crime worth Rs 370 Crores using the crypto route.” Until now, no genuine effort has been made by Flipvolt to trace the missing crypto assets. 

Meanwhile, ED seized bank assets that belong to the Asian crypto exchange WazirX a few days ago. Cumulatively, the seized assets amounted to $8.13 million (Rs 64.67 Crores).

Similarly, WazirX did not conduct KYC and EDD procedures. Thereafter, CZ asked the users of the distraught exchange to transfer their funds to Binance.

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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