The Enforcement Directorate (ED), in a very powerful development, blocked ₹500 crore of the man behind one of India’s biggest crypto frauds against some of the largest payment gateways that were used in the illegal scam. The investigation into the HPZ Token scam involves the funds that remain frozen in virtual accounts associated with much-used platforms like Razorpay, Payu, Easebuzz, and Paytm.
The scam appears to have defrauded investors to the tune of over ₹2,200 crore in over 20 Indian states, and the ED is probing the case. Certain Chinese nationals schemed their way north of the HPZ Token cryptocurrency platform. Reports in The Times of India say the accused used the platform to invite people to invest in cryptocurrency mining schemes that promised high returns on their investment in Bitcoin and other cryptocurrencies. The operation involved setting up a number of companies in at least 20 states, building the facade of investors who would eventually fall into the trap on which it was built — conspiring investors who would believe promises of returns that ranged from unbelievable to impossible.
The accused had planned to transfer the proceeds of their illicit activities outside India, the ED investigation found. Before these funds could be remitted to international beneficiaries, the ED froze a chunk of these funds, which were held in payment gateways during bulk transactions. Then, when these payments hit the gateways, the funds would sit with the gateways for up to a day or two, giving them the window in which to act. For their part, the ED was able to freeze ₹500 crore from the virtual accounts, shutting down further transfer of illicit funds.
The India-based HPZ Token scam is another example of how crypto-based scams are becoming a big threat, and authorities need to act now. If not, it can be a worst-case situation for India. Authorities are still trying to track down the perpetrators and investigate where the attack came from.
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