Paytm share price plunged over 8% on Friday after a report said that the company and seven other payment gateways have come under the Enforcement Directorate (ED) scanner for alleged involvement in a cryptocurrency scam. Paytm shares declined as much as 8.84% to ₹773.90 apiece on the BSE.
One 97 Communications, the parent company of fintech giant Paytm, is among eight payment gateways that are under investigation by ED, which has frozen around ₹500 crore in their virtual accounts over the past two years, Times of India (TOI) reported.
This action is in connection with their alleged involvement in a cryptocurrency scam orchestrated by 10 Chinese nationals through the HPZ Token app. The accused reportedly amassed over ₹2,200 crore from individuals across 20 states, promoting investments in cryptocurrency mining.
A portion of these funds was remitted abroad, while approximately ₹500 crore was frozen in the virtual accounts of these payment gateways before they could be transferred to beneficiaries. 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, the newspaper report said.
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, it added.
The accused operated a nationwide scheme, incorporating companies in at least 20 states, offering investments in cryptocurrency mining via the HPZ Token mobile app.
In a related development, a PMLA court in Nagaland declared Delhi resident Bhupesh Arora a fugitive economic offender on January 22, after he evaded appearance despite a non-bailable warrant, the TOI report said. Arora fled to Dubai in 2022 following the initiation of the ED's investigation. The ED has filed a chargesheet implicating 298 individuals in connection with this scam.
Meanwhile, Paytm has issued a clarification on stock exchanges mentioning that the company has not received any notice from the Enforcement Directorate and the instances being reported by the media pertain to similar old enquiries regarding third party merchants.
“...we confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles. The information published is factually incorrect and misleading and we had not received any query from the media prior to the publishing of this news article,” One 97 Communications said in a regulatory filing.
“Please refer to our letter dated September 4, 2022, regarding the Directorate of Enforcement's (ED) search operations involving certain merchants for whom we provided payment processing solutions. The instances currently being reported by the media pertain 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,” the company statement added.
Additionally, Paytm also clarified that contrary to media reports there has been no probe on the Company or its subsidiaries, the ED’s probe is on 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 in accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,” Paytm said.
Paytm stock price has fallen 16% in one month, but has gained over 8% in three months. Paytm shares have delivered stellar returns of 81% in six months. Over the past one year, Paytm share price was up 10% and in two years' period, the stock has gained over 52%.
At 12:45 PM, Paytm shares were trading 3.18% lower at ₹821.95 apiece on the BSE.
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