ED freezes another Rs 370 crore in crypto probe;  EarlySalary targets $100 million in funding

ED freezes another Rs 370 crore in crypto probe; EarlySalary targets $100 million in funding

Last Friday, the ED disclosed that it froze bank assets of crypto exchange WazirX worth Rs 64.67 crore as part of a money laundering investigation. Now, the agency claims to have frozen assets worth Rs 370 crore of a Bengaluru company that deposited its funds with the Indian branch of Singaporean crypto exchange Vauld and used them to launder “ proceeds of crime”.

Also in this letter:

■ EarlySalary in talks to raise around $100 million from TPG, Norwest
Paytm stock drops 4.66% after IIAS advises against CEO reappointment
■ Over 7% of Indians held crypto in 2021, according to UN trade body

ED Tethers Crypto Assets Held in Vauld’s Indian Entity

The Enforcement Directorate (ED) said on Friday that it had tied Rs 370 crore to the assets of a Bengaluru-based company linked to the instant loan app case. The assets were parked in bank and payment gateway balances and crypto wallets on Flipvolt, the Indian branch of Singaporean crypto exchange Vauld.

Details: The ED said it carried out searches at several premises linked to the company, Yellow Tune Technologies Pvt Ltd, for three days from August 8.

Vauld, suspended all deposits and withdrawals on its platform in June, following the collapse of stablecoin terraUSD and its sister token Luna. In July, Vauld signed an indicative term sheet to be acquired entirely by another Nexo, another crypto lender, pending due diligence.

Shell Company? The ED said its investigation revealed that Yellow Tune was a front company with Chinese nationals on its board, and that funds to the tune of Rs 370 crore had been deposited by 23 entities, including financial firms Non-Banking Accused (NBFC) and their fintech arms in Yellow Tune’s Indian rupee wallets.

“By encouraging obscurity and having lax anti-money laundering standards, [Flipvolt] actively assisted Yellow Tune in laundering proceeds of crime worth Rs 370 crore using the crypto route. Therefore, equivalent movable assets to the extent of Rs 367.67 crore belonging to Flipvolt in the form of bank balances and payment gateways worth Rs 164.4 crore and crypto assets in their accounts of pool worth Rs 203.26 crore, are frozen,” the ED said.

Move two: This is the second time this month that the ED has frozen the bank holdings of a crypto exchange. Last Friday, he said he recently conducted searches against a director of Zanmai Labs, owner of popular crypto exchange WazirX, and issued an order freezing his bank assets totaling Rs 64.67 crore.

The agency is investigating at least 10 cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime by firms charged in the instant loan apps case, as we reported on Thursday .

EarlySalary in talks to raise about $100 million from TPG, Norwest


Digital lending fintech EarlySalary is closing a $100 million funding round led by private equity fund TPG and Norwest Venture Partners, multiple sources tell us.

The round is expected to be announced in the coming days and will value EarlySalary at around $300 million, another person said.

What he does: Founded in 2015 by Ashish Goyal and Akshay Mehrotra, Pune-based EarlySalary offers instant loans of up to Rs 5 lakh directly to wage earners.

It also partners with companies to help employees receive salary advances into their bank accounts in the event of an emergency.

Changing Fintech: EarlySalary’s latest funding comes shortly after the Reserve Bank of India (RBI) released its first set of digital lending guidelines. The new rules shift the focus back to regulated entities, giving fintechs with an active NBFC (non-bank financial company) license an edge over others.

EarlySalary has an NBFC license, through which it also co-lends to its customers and partners.

In June, the RBI plunged fintech firms after banning the loading of prepaid payment instruments (PPIs) via lines of credit, directly affecting the operations of challenger card startups including Slice and Uni.

Fintech VS RBI Timeline

EarlySalary was also affected and prevented customers from making transactions on their prepaid cards. However, sources say the proceeds from the card did not account for a significant share of the company’s loan disbursements.

Paytm stock drops 4.66% after IIAS advises against CEO reappointment


Shares of Paytm One parent 97 Communications closed the day down 4.66% after proxy advisory firm Institutional Investor Advisory Services (IIAS) advised its shareholders to vote against reappointing Vijay Shekhar Sharma as Managing Director.

At one point, the stock was down 6.2% on the day.

IIAS said Sharma had made several commitments in the past to make the business profitable, but these had not materialized.

Statement: “The board should consider professionalizing management,” IIAS said ahead of Paytm’s annual general meeting on Aug. 19. He also advised shareholders to vote against Shekhar’s compensation, saying it was higher than CEOs of Sensex companies, most of which are profitable.

Losses: One97 Communications Ltd, backed by China’s Alibaba Group Holding and its subsidiary Ant Group, posted a loss of Rs 644 crore for the June quarter last week but said it was on track to achieve profitability operational by September 2023.

Tweet of the day

Summary of ETtech offers


■ UpGrad, led by Ronnie Screwvala, raised $210 million in a funding round at a $2.5 billion valuation. Many high-profile investors participated in the round, including existing backers Temasek, IFC and IIFL. The funding comes amid tough times for edtech startups, with many like Byju’s and Unacademy downsizing to navigate the gloomy economic environment.

■ Customer engagement and user retention software platform Clevertap has raised $105 million in a Series D funding round led by global investment group CDPQ. IIFL technology fund AMC and existing investors Tiger Global and Sequoia India also participated in the round. ET had announced on August 9 that the company was looking to raise $75 million. Clevertap aims to use the fresh funds for the expansion and strengthening of its team.

■ Dezerv, a year-old wealth management startup, raised $21 million in a funding round led by Accel, with participation from existing investors such as Whiteboard Capital and Elevation Capital. Founded by Sandeep Jethwani, Sahil Contractor and Vaibhav Porwal, Dezerv offers a technology-driven financial platform for professionals to manage their money. So far, he has seen almost Rs 800 crore invested through his platform and plans to use the new capital to add new investment opportunities.

Here is a list of all the startups that raised funds this week.

Over 7% of Indians held crypto in 2021, says UN trade body


The United Nations Trade and Development Organization (UNCTAD) said in a report that more than 7% of Indians owned cryptos last year as the adoption of these digital assets increased among developing countries.

According to the report, Ukraine tops the list, with around 12.7% of its population holding crypto, while India ranks seventh.

“Recent digital currency market shocks suggest that there are privacy risks associated with holding crypto, but if the central bank steps in to protect financial stability, then the issue becomes public,” a- he declared.

RBI Governor Shaktikanta Das called crypto a “clear danger” to the financial system earlier this year as India seeks to tightly regulate volatile assets.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Ruchir Vyas in New Delhi. Graphics and illustrations by Rahul Awasthi.


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