Paytm clarified on Friday, January 24, that it had not received any fresh notice, communication, or query from the Enforcement Directorate (ED) after reports suggested that the leading fintech major was among companies facing a probe over ongoing cryptocurrency scams. Vijay Shekhar Sharma-led fintech dismissed the media reports as ‘factually incorrect and misleading’.
"We confirm that we have not received any such new notice, communication, or query from the ED regarding the matter mentioned in the media articles," Paytm said in a regulatory filing to the stock exchanges today, terming the information published in reports as "factually incorrect and misleading".
Paytm dismissed the media reports, claiming the ED is investigating eight payment gateways, including Paytm, in connection with a scam involving 10 Chinese nationals, promoting investments in cryptocurrency mining.
Drawing attention to its previous letter dated September 4, 2022, regarding the ED search operations involving certain merchants for whom it provided payment processing solutions, Paytm said that the current media reports pertained to similar old enquiries regarding third-party merchants.
"We would like to clarify that these merchants are independent entities and are not part of our group. We confirm that we had fully cooperated with the authorities and had complied with all their directives," Patym said in its BSE filing.
Paytm further clarified that contrary to media reports, there has been no probe against the company or its subsidiaries, and the ED’s probe is against third-party merchants. "We urge investors and stakeholders not to rely on unverified media reports and assure you that should any material developments occur, we will promptly disclose the same under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," Paytm added.
Earlier today, the national daily Time of India reported that eight payment gateways, including Paytm, RazorPay, PayU, and Easebuzz, have been under the ED scanner in connection with ₹2,200 crore raised across 20 states and linked to 10 Chinese nationals in a cryptocurrency scam.
According to the report, Chinese nationals were allegedly operating one of the biggest cryptocurrency scams from India through the HPZ Token app. The accused allegedly collected over ₹2,200 crore from various states in the country. The ‘proceeds of the crime’ were remitted out of the country, and a part of this amount was frozen in the payment gateways while being routed to beneficiaries.
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The amount stayed in the payment gateway for a day or two when the bulk payments were made. It was during this process that the ED froze ₹500 crore. The newspaper report said the ED is examining the money trail and assessing whether these gateways generated Suspicious Transaction Reports (STRs) and alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU), as mandated for financial institutions.
Among the frozen amounts, PayU held the highest at ₹130 crore, followed by Easebuzz with ₹33.4 crore, Razorpay with ₹18 crore, CashFree with ₹10.6 crore, and Paytm with ₹2.8 crore. With these reports, the share price of One 97 Communications, the parent company of fintech giant Paytm, fell over eight per cent during the market session hours on Friday.
On Friday, Paytm shares declined as much as 8.84 per cent to ₹773.90 apiece on the BSE. Paytm stock has fallen 16 per cent in one month but has gained over eight per cent in three months. Paytm shares have delivered stellar returns of 81 per cent in six months. Over the past one year, Paytm share price was up 10 per cent and in two years' period, the stock has gained over 52 per cent.
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