Paytm share price cracks over 8% on report of ED investigation into an alleged crypto scam

A report revealed that Paytm and seven additional payment gateways were placed under ED investigation for potential cryptocurrency scam involvement which caused Paytm stock price to fall over 8%. On the BSE Paytm shares fell by 8.84% reaching ₹773.90 per share.

Times of India (TOI) reported that Enforcement Directorate (ED) has been investigating eight payment gateways including One 97 Communications which owns the fintech giant Paytm and froze about ₹500 crore from their virtual accounts over the past couple of years.

The investigation targets their alleged participation in a cryptocurrency scam carried out by 10 Chinese nationals via the HPZ Token app. The accused collected more than ₹2,200 crore by attracting individuals from 20 states to invest in cryptocurrency mining operations.

These payment channels transferred some funds to foreign accounts while the remaining ₹500 crore became blocked in their virtual accounts before reaching the recipients. The ED is tracing the money trail to determine if the payment gateways filed Suspicious Transaction Reports (STRs) and informed both the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU) according to financial institution requirements, according to the newspaper report.

The frozen amounts showed PayU leading with ₹130 crore and Easebuzz came next with ₹33.4 crore, while Razorpay followed with ₹18 crore and CashFree held ₹10.6 crore with Paytm at ₹2.8 crore.

The defendant managed a countrywide operation that established business entities in 20 different states to attract cryptocurrency mining investments through the HPZ Token mobile application.

The PMLA court in Nagaland labeled Bhupesh Arora from Delhi as a fugitive economic offender on January 22 because he failed to appear in court despite a non-bailable warrant according to a TOI report. After the ED started its investigation Arora escaped to Dubai in 2022. The Enforcement Directorate submitted a chargesheet against 298 people who participated in crypto scam.

Although Paytm shares dropped by 16% during the last month its three-month performance shows an increase of over 8%. Paytm share price appreciated by 81% across a six month timeframe. Within one year Paytm stock appreciated by 10%, while its value increased by 52% over two years.