₹500 Crore Crypto Scam: ED Targets Payment Gateways in Major Crackdown

In one of the largest crackdowns on cryptocurrency scams in India, the Enforcement Directorate (ED) has frozen approximately ₹500 crore across virtual accounts linked to eight major payment gateways, including Razorpay, PayU, Easebuzz, and Paytm. This action is part of an investigation into the HPZ Token scam, which defrauded investors of over ₹2,200 crore across 20 states in India, as reported by The Times of India.
The HPZ Token Scam: A Widespread Cryptocurrency Fraud
The HPZ Token scam is centered around a group of 10 Chinese nationals accused of orchestrating the scam through a mobile app named HPZ Token. Investors were lured with promises of high returns from cryptocurrency mining, particularly Bitcoin. To facilitate their fraudulent activities, the accused reportedly established companies in at least 20 states, including Karnataka, Haryana, Uttar Pradesh, Maharashtra, and West Bengal.
The ED investigation uncovered that the group used multiple bank accounts—84 in Delhi, 37 in Karnataka, and 26 in Haryana—to manage the proceeds of their crime. The accused allegedly planned to transfer these funds abroad, but ED intervened to freeze a portion of the proceeds through payment gateways before they could be remitted.
Payment Gateway Involvement
The accused utilized major payment gateways for bulk transactions. Funds often stayed in these gateways for a day or two, during which the ED froze approximately ₹500 crore. Razorpay, one of the named gateways, denied any new communication or scrutiny by the ED, stating, "We have not received any new notices or inquiries from the ED related to the issues referenced in these articles."
Investigation and Legal Action
The ED's probe into the HPZ Token scam was initiated following a cybercrime case registered in Kohima, Nagaland. The case involved violations under the Indian Penal Code and the Information Technology Act. The agency is tracing the money trail and investigating whether payment gateways generated Suspicious Transaction Reports (STRs) to alert the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU).
On January 22, a PMLA court in Nagaland declared Bhupesh Arora, a Delhi resident, and his close associates as fugitives for failing to appear before the ED despite a non-bailable warrant.
Impact of the Scam
The HPZ Token scam has exposed vulnerabilities in India's financial systems and payment gateway operations. As the investigation continues, it highlights the importance of regulatory oversight and the need for financial institutions to remain vigilant against fraudulent schemes.