India Freezes Peter Thiel-Backed Vauld’s Crypto and Banking Assets Worth $46M CryptoBlog


India’s Law Enforcement (ED) Directorate froze Vauld’s crypto and banking assets worth around INR 370 crore ($46,439,181). Vauld halted deposits and withdrawals last month. India’s law enforcement agency is reportedly investigating more than 10 cryptocurrency exchanges.

Indian Authority Freezes Another Cryptocurrency Exchange’s Assets

The Enforcement Directorate (ED), a law enforcement and economic intelligence agency of the Indian government, has frozen the assets of another cryptocurrency exchange.

The agency announced on Friday that it had raided various premises of Yellow Tune Technologies in Bangalore and issued an order to freeze its bank balances, payment gateway balances and crypto balances from Flipvolt’s crypto exchange. Technologies totaling Rs 370 crore ($46,439,181) worth of assets. Flipvolt Technologies is the India-registered entity of Singapore-headquartered Vauld, a cryptocurrency trading, borrowing and lending platform.

India freezes Peter Thiel-backed Vauld crypto and banking assets worth $46 million

ED explained that approximately Rs 370 crore was deposited by 23 entities into Yellow Tune Technologies INR wallets held with the Flipvolt Technologies crypto exchange. These amounts were “proceeds of crime from predatory lending practices,” the authority said, adding:

Yellow Tune using assistance from crypto exchange Flipvolt…helped accused fintech companies avoid regular banking channels and managed to easily withdraw all fraudulent money in the form of crypto assets.

The agency alleged that Flipvolt “has a very lax KYC [know-your-customer] standards, no EDD [enhanced due diligence] mechanism, no control of the origin of the depositor’s funds, no mechanism for lifting STRs [suspicious transaction reports].”

Additionally, Flipvolt did not provide the full trail of crypto transactions made by Yellow Tune Technologies and could not provide any form of KYC of the opposing party’s wallets, ED noted.

The authority concluded that “by encouraging obscurity and having lax AML [anti-money laundering] standards,” the crypto exchange “actively assisted Yellow Tune in laundering proceeds of crime worth Rs 370 crore using cryptocurrency,” adding:

Hence, equivalent moveable assets to the extent of Rs 367.67 crore lying with crypto exchange Flipvolt in the form of bank and payment gateway balances worth Rs 164.4 crore and crypto assets lying in their pool accounts worth Rs 203.26 crore are frozen under PMLA, 2002, until the full fund trail is provided by the crypto exchange.

Vauld’s website explains that “as soon as a user deposits funds into their Vauld wallet, they go into a centralized pool.” From this pool, funds are allocated for lending and trading. PMLA, 2002 is India’s Prevention of Money Laundering Act.

The crypto exchange told Businesstoday: “We are investigating this matter, we ask for your patience and support, we will update you as soon as we have more information on this matter.”

After halting deposits and withdrawals last month, Vauld announced a restructuring plan on July 4 due to the “financial challenges” it has faced in recent months. Defi Payments Pte Ltd., the entity that operates Vauld in Singapore, has also sought court protection from the lawsuits against it. The exchange is currently not permitted in Singapore.

In July last year, Vauld raised $25m in a Series A funding round for its India-based borrowing and lending platform. The round was led by Valar Ventures, a US-based venture capital fund co-founded by billionaire Peter Thiel. Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos, Robert Leshner, Cadenza Capital and others also participated in the round.

Last week, ED announced that it had frozen the bank assets of Wazirx, a major crypto exchange in India. The authority clarified that it had conducted research on one of the directors of Zanmai Labs, owner of Wazirx, and issued an order freezing the bank balances of the exchange to the tune of INR 64.67 crore.

ED also explained that the action against Wazirx is part of a money laundering investigation involving Non-Banking Financial Companies (NBFCs) and their fintech partners for “predatory lending practices in violation of the RBI”. [Reserve Bank of India] guidelines.”

Additionally, the Economic Times reported on Thursday that ED is investigating at least 10 cryptocurrency exchanges for allegedly laundering more than INR 1,000 crore. The crypto-trading platforms allegedly failed to perform adequate due diligence and failed to file suspicious transaction reports.

Keywords in this story

ED, Law Enforcement Branch, tax order, Flipvolt crypto exchange, bank account freeze, Peter Thiel, Vauld asset freeze, Vauld crypto exchange, Vauld indian exchange, Vauld singapore exchange, Yellow Tune technologies

What do you think of India freezing bank accounts of cryptocurrency exchanges? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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