The Enforcement Directorate has frozen funds worth Rs 46.67 crore held in payment gateways Easebuzz, Razorpay, Cashfree, and Paytm after launching an investigation into Chinese-controlled credit apps and investment tokens. The measures taken under the Prevention of cash Laundering Act (PMLA) came after the agency conducted searches on September 14 of Chinese-controlled loan applications and investment tokens at locations like Delhi, Mumbai, Ghaziabad, Lucknow, and Gaya.
In a statement, the agency said that it included 16 banking premises and payment gateways in Delhi, Gurugram, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur, and Bengaluru about the investigations related to an app-based token called HPZ. and related entities.
The agency had initiated an investigation into the case supported by an FIR filed by the Cyber Crime Cell of the Kohima Police in Nagaland in October last year. A huge amount of balances were found. It was maintained within the bank and virtual accounts of the involved entities with the payment aggregators, the agency said. Easebuzz, Razorpay, and Cashfree said their operations are fully compliant.
Rs 8.21 crores was found with Razorpay Software Private Limited, as informed by the agency. During a statement, Paytm said, “as mentioned in our stock market filing, the agency has directed us to freeze specific amounts from the MIDs of specific business entities. A spokesman for Cashfree Payments also said: “On the day of the inquiry we were ready to provide the requested and necessary information within a few hours. The operation and processes of accepting non-cash payments are fully compliant with existing regulations.”
Around 46 Million Rupees Frozen of Paytm and Other Accounts
During the search, the agency found incriminating documents and found balances maintained in the accounts of the involved entities with payment aggregators. An amount of around Rs 46.67 crore and froze it in some bank accounts.
The entities named by the authorities were only counterparties to a merchant who used our payment gateway that the merchant should have been proactively identified and blocked much earlier, before the investigation began, consistent with our internal risk management and compliance process. We are committed to ensuring that, our business operations comply with existing regulations.”
The agency has initiated a concealment investigation based on an FIR dated October 8, 2021, lodged under various sections of the IPC by the Cyber Crime police headquarters, Kohima, Nagaland.
What is HPZ Token?
HPZ Token was an app-based token that promised users large profits over investment by investing in mining machines for Bitcoin and other cryptocurrencies. The modus-operandi of the fraudsters was to first lure the victims to take a position in the company under the pretext of doubling their investment through the HPZ Token application.
The investigation found that the HPZ token was operated by Lillian Technocab Private Ltd and Shigoo Technology Private Limited, which were found to be linked to varied Chinese companies.
“We were ready to provide the required and necessary information within a few hours on the day of the inquiry. The operation and onboarding of cashless payments are fully by the prevailing regulations,” said a spokesman for Cashfree Payments.
Paytm Denies Freezing of Funds
The company said that its operations and onboarding processes adhere to the highest standard of governance and regulatory guidelines. Paytm has denied all the obligations put by the agency and has also said that the company and authorities helped the agency in whatever way possible. But, it is high time for the company to go through its terms and policies to avoid such incidents in the future.
Security breach in a company like Paytm is one of the issues that cannot be ignored. People from different corners of the nation use Paytm and if there is a security breach of this kind, then individuals and customers of these companies will have to think once before taking the services.
The company has to assure that not even a single customer is in doubt because of this news. Authorities said that they were really supportive during the investigation of the authority. 
Cashfree Payments also said it is fully compliant with existing regulations and will continue to cooperate with the agency operations. The authorities said that they cooperated with the agency officials. They provided everything that the officials asked for. But one has to confirm and make sure that this shouldn’t happen in the future.
Now, most of us opt for digital payments because it makes almost everything so easy. The authorities of the concerned company need to take care of their security and be accountable.
Incidents like these create doubt in the minds of users and customers and it may be acceptable for the company. Digital payments company Paytm on Friday issued a press release calling it “completely fake news”. “As stated in our stock market pages, the agency has asked to restrict definite amounts from MID of definite occupational units and none of these reserves are of Paytm or our group and company,” it said.
