The action was taken a month after Vauld halted withdrawals in July. The Enforcement Department (ED) has frozen bank deposits worth Rs 64.67 crore belonging to WazirX.
The ED is taking this most recent action as part of its continuing investigation into possible instances of money laundering involving at least ten cryptocurrency exchanges.
In a move that took place on August 11, the Enforcement Directorate (ED) froze the 370 crore rupees worth of bank assets that belonged to the cryptocurrency exchange Vauld, which is situated in Singapore. This comes just a few days after the ED froze the bank deposits of Rs 64.67 crore of the exchange WazirX, which Binance controls. An investigation is currently being conducted into the external transfer of crypto assets worth Rs 2,790 crore to unidentified wallets by WazirX.
ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets.
— ED (@dir_ed) August 5, 2022
This most recent turn of events is connected to the ongoing money laundering investigation that the ED is conducting against at least ten cryptocurrency exchanges and their fintech partners for predatory lending practices that violate the standards established by the RBI.
Increasing Trouble of Vauld
The decision made by the ED to take action against Vauld is a slap in the face for the cryptocurrency exchange based in Singapore, which is already having a difficult time. Due to “financial issues,” Vauld stopped all withdrawals, deposits, and trading provisions across its platform at the beginning of July.
Following the collapse of Terra Luna, users of the cryptocurrency lending platform withdrew hundreds of millions of dollars, causing the company to declare bankruptcy.
The chief executive officer of Vauld, Darshan Bathija, stated that the exchange had racked up liabilities totaling $400 Mn despite having assets worth only $330 Mn. According to a former employee, out of the 8 lakh users of Vauld, around 75% were Indians; however, Indian users accounted for only 10% of the company’s AUM. This is a crucial fact to keep in mind regarding Vauld.
In response to a question from the media, a representative from Vauld provided the following statement:
“We are investigating this situation; we respectfully urge your patience and support; we will keep you updated as soon as we get more information on this.”
The Compliance and Enforcement Directorate is intensifying the pressure it puts on cryptocurrency companies that it believes are breaking anti-money laundering regulations. The recent search warrants executed by the ED on the properties of a WazirX director brought the inquiry into money laundering to the public’s notice.
In the quick loan app case, the Enforcement Directorate (ED) estimates that the accused entities laundered over 1,000 crore rupees, equivalent to US$130 million, and adds that most of the charges have a connection to China.
After approaching exchanges to buy a cryptocurrency for more than Rs 100 crore ($13 million). ED is also accusing the companies of not raising suspicious transaction reports when they should have.
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