Paytm, Razorpay, PayU Under ED Lens in Rs 2,200 Crore Crypto Scam

The Enforcement Directorate (ED) is investigating eight payment gateways, including Paytm, RazorPay, PayU, and Easebuzz. Reports indicate that around Rs. 2,200 crores were raised across 20 states and were linked to 10 Chinese nationals involved in a cryptocurrency scam.

The Enforcement Directorate (ED) has reportedly frozen nearly Rs. 500 crores in a major crypto scam, leading to a decline in Paytm's stock price on Friday.

According to sources, the ED is investigating eight payment gateways, including Paytm, RazorPay, PayU, and Easebuzz, in connection with the scam. The funds were allegedly raised across 20 states and linked to 10 Chinese nationals.

The ED has frozen around Rs. 500 crore in virtual accounts linked to the scam over the past two years. The scam was reportedly operated by Chinese nationals (from India) behind the HPZ Token, one of India's largest crypto frauds, as initially reported by The Times of India.

The scam was a nationwide operation, allegedly raising over Rs. 2,200 crores from people across 20 states. Victims were offered opportunities to invest in cryptocurrency mining, including bitcoin, through the mobile app HPZ Token.

The proceeds from these illegal activities were transferred overseas, with part of the funds being frozen within the payment gateways before being sent to beneficiaries.

The scam became evident during the processing of bulk payments. The funds remained with the payment gateways for one or two days, during which the ED froze ~Rs. 500 crore, as reported.

A PMLA court in Nagaland on 22nd January declared a Delhi resident, Bhupesh Arora, a fugitive economic offender after he failed to appear before the agency. The ED has filed a chargesheet accusing 298 individuals of being involved in the scam.

The ED is currently investigating the money trail and checking if the gateways have generated suspicious transaction reports (STR) and alerted the RBI.

Financial institutions are required to submit STRs periodically to the RBI, which then forwards them to the Financial Intelligence Unit (FIU) for further investigation by relevant agencies.

PayU had the largest amount frozen in virtual accounts, with Rs. 130 crores of the alleged “proceeds of crime” linked to the HPZ Token scam. This was followed by Rs. 33.4 crore with Easebuzz, Rs. 18 crore with Razorpay, Rs. 10.6 crore with CashFree, and Rs. 2.8 crore with Paytm, as per the report.

Other payment gateways involved in the investigation include WunderBaked, AgreePay, and SpeedPay.

The report also revealed that over 50 companies were registered in Delhi, operating 84 bank accounts, while 26 firms in Karnataka had 37 bank accounts. Additionally, 19 companies were based in Haryana, and 11 in Uttar Pradesh, along with operations in Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, and West Bengal.

One 97 Communications reported a decline in revenue from operations, experiencing a year-on-year decrease of nearly 36 percent, falling from Rs. 2,850 crores in Q3 FY24 to Rs. 1,828 crores in Q3 FY25.

In contrast, during the same period, the company's net loss declined from a loss of Rs. 222 crores to a loss of Rs. 208 crores.

The stock has delivered positive returns of nearly 10 percent in one year, as well as around 82 percent returns in the last six months. The shares of One 97 Communications or Paytm have given negative returns of about 16 percent in the last one month.

Incorporated in 2000, One 97 Communications (Paytm) Limited is one of India's leading payment solutions providers in India with a digital ecosystem offering consumers and merchants a wide range of services including comprehensive payment solutions, payment facilitator services, facilitation of consumer and merchant lending, wealth management, insurance broking services, and more.