Fintech major Paytm on January 24 refuted a report that claimed the firm is among a few payment gateway that are being investigated by Enforcement Directorate (ED) in a crypto scam.
Paytm, Razorpay, PayU, Easebuzz and four other payment gateways are being investigated as the Enforcement Directorate (ED) froze around Rs 500 crore in their virtual accounts over the past two years in connection with some Chinese nationals running one of the biggest cryptocurrency scams, HPZ Token, from India, The Times of India has reported.
The firms said this is an old case and no new notices have been sent to them.
"We confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles. The information published is factually incorrect and misleading and we had not received any query from the media prior to the publishing of this news article," said Paytm in a stock exchange filing.
"Please refer to our letter dated September 4, 2022, regarding the Directorate of Enforcement's (ED) search operations involving certain merchants for whom we provided payment processing solutions. The instances currently being reported by the media pertain to similar old enquiries regarding thirdparty merchants. We would like to clarify that these merchants are independent entities and are not part of our group. We confirm that we had fully cooperated with the authorities and had complied with all their directive," added Paytm.
The report said that the scam was a pan-India operation where the gateways allegedly collected more than Rs 2,200 crore from people across 20 states where people were given the option to invest in the mining of cryptocurrencies, including bitcoins, through mobile app HPZ Token. They then remitted the “proceeds of crime” out of the country, a part of which was frozen with the payment gateways before they were remitted to beneficiaries, the report claimed.
Paytm urged its shareholders to not rely on "unverified media reports" while its stock fell over 8% on an intraday basis on January 24.
"We would also like to take this opportunity to clarify that contrary to media reports there has been no probe on the Company or its subsidiaries, the ED’s probe is on third-party merchants. We urge investors and stakeholders not to rely on unverified media reports and assure you that should any material developments occur, we will promptly disclose the same in accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," the firm added.
PayU had the highest amount frozen in the virtual accounts at Rs 130 crore of the alleged “proceeds of crime” related to the HPZ Token scam, 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, the report added.
Easebuzz clarified that there are no pending queries.
“We would like to clarify that the investigation by the Enforcement Directorate concerning the highlighted matter has no direct connection to Easebuzz. The matter in relation to HPZ token is 2-3 years old and there are no pending queries at Easebuzz end from the authorities. Additionally, we have not received any communication from the authorities regarding this case. Furthermore, we wish to emphasize that Easebuzz has consistently provided all necessary information to the relevant authorities as and when requested, and we have been commended by the authorities for our cooperation. Easebuzz is a highly compliant and secure payments platform, and we remain committed to operate in full compliance with all existing regulations," said Easebuzz.
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