India’s Control Directorate (DE) announced on Friday that it has frozen the bank accounts of Bengaluru-based financial services company Yellow Tune Technologies, some of which were held by the cryptocurrency exchange. Flipvolt cryptocurrencies, the Indian branch of Vauld, from Singapore. The move is related to an ongoing investigation into money laundering by instant loan companies linked to China. It is the second time this week that the agency has taken action in the cryptocurrency arena in relation to that case.
The financial watchdog announced it was freezing Yellow Tune’s bank balances, payment gateway balances and balances on cryptocurrency exchange Flipvolt totaling Rs 3.7 billion, or $46.4 million, after determining that the company was a fictitious entity constituted by two Chinese citizens using pseudonyms. According to newspaper reports, the DE spent three days searching the premises associated with Yellow Tunes.
The DE discovered 23 entities that had deposited funds in Yellow Tune’s Flipvolt wallets that were then transferred out of the country. The DE heavily criticized Flipvolt’s handling of the funds. The agency said:
“Lax KYC rules [Conozca a su cliente], the loose regulatory control of allowing transfers to foreign wallets without asking for any reason/declaration/KYC, not recording transactions on Blockchains to save costs, etc., has ensured that Flipvolt is not able to give any account of the missing crypto assets. It has made no sincere effort to track down these crypto assets.”
Citing India’s Prevention of Money Laundering Act 2002, the DE froze funds in Flipvolt accounts equal to the sums it transferred from Yellow Tune wallets to foreign wallets “until a full trail of funds is provided by the exchange.” The DE classified these funds as “nothing more than the proceeds of crime derived from predatory lending practices.”
The seizure of Flipvolt’s funds is just the latest bad news for Vauld. The Singapore exchange cut its workforce by 30% in June and stopped withdrawals from its accounts in early July. That same month, he applied for protection from his creditors in Singapore. He was granted a three-month moratorium, similar to that of Chapter 11 in the United States.
Earlier this week it was reported that The DE had frozen accounts containing $8.1 million worth of funds from cryptocurrency exchange WazirX and was investigating at least nine other exchanges with ties to Chinese-backed instant lending companies. In its latest statement, the Department of Justice indicated that the investigation of that case is still open.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.