India’s anti-money laundering agency has frozen assets worth $46.4 million from the local entity of Vauld for facilitating “crime-derived” proceeds from predatory lending firms in the latest headache for the crypto exchange that filed for protection from creditors last month.
Flipvolt Technologies, the India registered entity of Singapore-headquartered Vauld, was used to deposit 3.7 billion Indian rupees by 23 entities including non-banking financial companies and fintech firms into the wallets controlled by Yellow Tune Technologies, the Enforcement Directorate said Friday of its ongoing investigation.
The agency said the Indian entity of Vauld maintains “very lax KYC norms, no EDD mechanism, no check on the source of funds of the depositors, no mechanism of raising STRs, etc,” factors that led the accused firms in “avoiding regular banking channels” and “easily take out all the fraud money in the form of crypto assets.”
Vauld’s India entity failed to provide the agency with a complete trail of crypto transactions made by Yellow Tune and could also not supply KYC details of the wallets, ED said.
“Lax KYC norms, loose regulatory control of allowing transfers to foreign wallets without asking any reason/declaration/KYC, non-recording of transactions on Blockchains to save costs etc, has ensured that Flipvolt is not able to give any account for the missing crypto assets,” it added (PDF).
“It has made no sincere efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted M/s Yellow Tune in laundering the proceeds of crime worth Rs 370 Crore using the crypto route.”
The agency said it has frozen assets from Vauld’s India entity till it provides a complete fund trail and the investigation is ongoing.
Vauld, which suspended its customers from withdrawing, trading and depositing on its eponymous platform last month, filed for bankruptcy last month and reportedly owes creditors $363 million, according to news outlet The Block, which cited legal documents it obtained. The startup counts Coinbase Ventures, Pantera Capital and Peter Thiel-backed Valar Ventures among its backers.