Indian Enforcement Clamps Down On 8 Chinese Firms, Freezes $6.9M

The Indian Government, through the Enforcement Directorate, stopped the operations of eight Chinese-controlled organizations by freezing their accounts. The firms were suspected of misusing the app-based token HPZ. The funds frozen total $6,935,554.10, equating to Rs. 56.49 Crore. The Enforcement Directorate, under the watch of the Finance Ministry, froze the funds in connection with an investigation into the pp-based token HPZ.

The finance ministry made an announcement during a press release. It was a confirmation that the decision was because of various parties misusing the app token. Technology Private Limited of Wecash, Aliyeye Network, Magic Data, Baitu, Mobicred, Acepearl Services, Larting, and Comein Network are the implicated Chinese organizations. The HPZ Token promised users huge profits on their investments under the guise of investing in Bitcoin, other cryptocurrencies, and related technology. The press release read, “The modus-operandi of the fraudsters was first to lure the victims into investing in their companies on the pretext of doubling/multiplying their investment through the “app HPZ Token” and other similar applications.”

Investigations Started on October 8

Initially, the Enforcement Directorate had stopped operations in virtual account balances to the tune of Es. 46.67 Crore, which is $5,728,733.17, during the investigations done on September 14. Further investigations led to more funds being listed, increasing to Rs. 56.49 Crore or $6,935,554.10. The Enforcement Directorate began investigations into the money laundering allegations on October 8 based on the first information report under different segments of the Chinese Firms Penal Code, by Cyber Crime Police Station, Kohima, Nagaland. A report stated that the companies in question worked with various non-banking financial entities and got funds from the public through applications like Cashmart, Cashhome, and easyloan. Coin Edition first reported the news of the Enforcement Directorate’s actions against the Chinese organizations. 

China Feels The Indian Enforcement Directorate’s Actions Affect Business

Earlier in July, China’s embassy in India revealed that the various crackdowns on Chinese companies were ruining foreign entities’ confidence in investing and operating in India. Many Chinese companies struggled to engage in business in the country after political tension increased following a border clash in 2020. India stated that the numerous crackdowns stemmed from security concerns relating to tax evasion and money laundering. 

The Opposition is Accusing The Ruling Party of Weaponizing the Indian Enforcement Directorate

The Enforcement Directorate is an economic intelligence and law enforcement agency tasked with executing economic laws and stopping financial crimes in India. It is part of the Department of Revenue, Ministry of Finance, and Government of India. It comprises personnel from the Indian Police Service, the Indian Enforcement Revenue Service, and the Indian Administrative Service. In July, according to information from the Union government in Parliament, out of the 5,422 cases identified by the Prevention of Money Laundering Act in the last one and a half decades, less than 25 convictions were successful. This translates to a success rate of less than 0.5%. Recently, there has been a spike in the cases registered, particularly during Prime Minister Modi’s second term.

This has led to accusations by the opposition that the government institution is being used to settle political scores by the ruling party. They state that Modi has weaponized this and other government agencies to go after the top brass in the opposition. The list of those who have been supposedly targeted includes Sonia Gandhi and her son, former finance minister P Chidambaram, Rahul Gandhi, and former Maharashtra home minister Anil Deshmukh. Information released by the finance ministry indicated a sharp increase in cases identified by the Enforcement agency ever since Bharatiya Janata Party won the election in 2019.