Embattled Singapore-based crypto lending startup Vauld has been hit with a freezing order by the Indian Enforcement Directorate (ED) in connection with an ongoing money laundering case.
Vauld is among 10 firms with alleged Chinese connections, which are under scrutiny by Indian officials for helping to launder Rs 1,000 Crore (US$125.65 million), which were sent to overseas wallets. Vauld knowingly allowed the fake loan app to launder the criminal proceedings by not doing KYC or AML, the ED said in a press release on Friday.
It has ordered the freezing of Rs 2040 million (approx US$26 million) from “pool wallets” in connection with a single customer whose account has been deactivated.
“The freezing order of the Enforcement Directorate is specific to that one customer that availed our services for a brief period of time, whose account we subsequently deactivated. We respectfully disagree with the freezing order,” Vauld said in a statement.
We are disappointed to see the Enforcement Directorate take the action that they did against us.— Darshan Bathija (@darshanbathija) August 13, 2022
We disagree with their perspective on our KYC and AML procedures since they are robust. https://t.co/Ot3C49pMPJ
Vauld’s Indian entity, Flipvolt Technologies, was used by 23 companies to siphon funds into wallets owned by Yellow Tune Technologies, a Chinese company whose founders are untraceable, according to Bein Crypto.
Founded in 2018, Vauld counts Peter Thiel, Pantera and Coinbase among its investors and has raised US$27 million in a Series A round. However, last month, Vauld suspended all withdrawals, trading and deposits citing “financial challenges” at the firm. It then applied for a moratorium order in Singapore to create room for the restructuring process.
According to The Block sources, the hole in Vauld’s balance sheet is worth “mid to high double-digit millions.” Swiss crypto lender Nexo has offered to buy the platform, and signed an indicative term sheet giving it 60 days to complete the process.