Paytm’s Crypto Trouble: ED Freezes Funds, Shares Dive
Paytm’s shares dropped by 9% on Friday following reports that the company, along with seven other payment gateways, is being investigated by the Enforcement Directorate (ED) for its suspected involvement in a cryptocurrency scam.
One 97 Communications, popularly known as Paytm was trading down by 4 % at ₹820 per share on the BSE recovering from a broader fall
The investigation is part of a broader crackdown on an illegal cryptocurrency operation led by a group of Chinese nationals through the HPZ Token app. The ED has frozen ₹500 crore in virtual accounts tied to eight payment gateways, including Paytm, over the last two years.
These funds were reportedly linked to a cryptocurrency mining investment scheme that defrauded individuals across 20 states in India, amassing a staggering ₹2,200 crore.
The accused facilitated the transfer of funds both domestically and internationally. However, the ED’s probe has revealed that approximately ₹500 crore was intercepted before it could be transferred out. Now, authorities are focusing on tracking the money trail, assessing whether these gateways followed mandatory protocols—such as generating Suspicious Transaction Reports (STRs) and notifying the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU).
Among the frozen accounts, PayU holds the largest share at ₹130 crore, followed by Easebuzz with ₹33.4 crore, Razorpay with ₹18 crore, CashFree with ₹10.6 crore, and Paytm, which had ₹2.8 crore frozen.
The scam, executed through the HPZ Token app, ran a nationwide operation offering investments in cryptocurrency mining, with companies spread across 20 states.
In a related development, the ED declared Bhupesh Arora, a key figure in the scam, a fugitive economic offender after he fled to Dubai in 2022. A chargesheet filed by the ED implicates 298 individuals in connection with the operation.
As the investigation intensifies, the scrutiny of financial institutions and payment gateways in India continues to mount, leaving Paytm and others facing an uncertain future.
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