ED Freezes ₹500 Crore in Crypto Scam Crackdown, Payment Gateways Under Investigation

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ED Freezes ₹500 Crore in Major Crypto Scam Linked to Chinese Nationals and Payment Gateways

In one of the largest crackdowns on cryptocurrency scams involving Chinese nationals, the Enforcement Directorate (ED) has frozen approximately ₹500 crore in virtual accounts linked to eight prominent payment gateways, including Razorpay, PayU, Easebuzz, and Paytm.

The investigation centers on the HPZ Token scam, which defrauded investors of over ₹2,200 crore across 20 states in India, according to The Times of India. The accused reportedly attempted to transfer the proceeds of their crimes abroad, but a portion of the funds was intercepted and frozen by the ED during the processing phase with payment gateways.

What is the HPZ Token Scam?
The HPZ Token scam involved a network of 10 Chinese nationals who enticed victims to invest in cryptocurrency mining via the mobile app HPZ Token, promising high returns. The accused established companies in at least 20 states, including Karnataka, Haryana, Uttar Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, and West Bengal, to perpetrate the fraud.

Victims were lured with assurances of significant profits from mining Bitcoin and other cryptocurrencies, only to be defrauded. Investigations revealed that the accused operated numerous bank accounts across states, including 84 in Delhi, 37 in Karnataka, and 26 in Haryana, to facilitate their fraudulent activities.

ED’s Action and Investigation
The ED is probing the financial trail to determine whether payment gateways had issued suspicious transaction reports (STR) to alert regulatory bodies such as the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU).

A senior ED official confirmed that the agency is closely examining the gateways’ compliance with anti-money laundering guidelines. The investigation stems from a case registered by the cybercrime police station in Kohima, Nagaland, under various sections of the Indian Penal Code and the Information Technology Act.

Key Developments
On January 22, a court in Nagaland handling Prevention of Money Laundering Act (PMLA) cases declared Bhupesh Arora, a Delhi resident, and his associates as fugitives after they failed to comply with a non-bailable warrant.

This crackdown highlights the growing misuse of digital payment platforms and cryptocurrencies for fraudulent activities. The ED’s swift action is a significant step toward curbing financial crimes and safeguarding investor interests in the rapidly expanding crypto market.

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