The HPZ Token scam, in which eight payment gateways, including Paytm, PayU, and Razorpay, have been under the Enforcement Directorate’s (ED) scanner as per a report by The Times of India, is said to have started with the launch of the ‘HPZ Token’ mobile app. The app-based token promised investors humongous gains by investing in mining machines for Bitcoin and other cryptocurrencies.
Specifically, for an investment of Rs 57,000, returns of Rs 4,000 per day were promised over three months.
Financialexpress.com couldn’t independently verify the report of payment gateways under the ED scanner.
Initially, investors were paid their promised returns. This created a lot of trust which encouraged them to invest further. Later, the money siphoned from the investors was diverted to different shell companies, many with alleged Chinese connections.
These shell companies were located in different states in India, such as Delhi, Karnataka, Haryana, Uttar Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, and West Bengal.
The ED found that several payment gateways, including Razorpay, PayU, Easebuzz, and Paytm, were being used to facilitate transactions for the HPZ Token app, according to the report. These payment gateways reportedly processed huge sums of money, of which the ED froze Rs 500 crore during the investigation.
The frozen amount included Rs 130 crore for PayU, Rs 33.4 crore for Easebuzz, Rs 18 crore for Razorpay, Rs 10.6 crore for CashFree, and Rs 2.8 crore for Paytm, the report said. Other platforms allegedly involved were WunderBaked, AgreePay, and SpeedPay.
The scam came to the fore in 2021 with the Cyber Crime Police Station in Kohima, Nagaland, lodging a case against the operators of the scheme, thus laying a foundation for ED investigation.
From the investigation process, it was gathered that the accused had collected more than Rs 2,200 crore of funds from various investors across 20 states and also remitted portions of the funds outside India.
The agency had provisionally attached movable and immovable properties worth Rs 106.20 crore in India and Dubai, linked to the scam. These properties included assets of multiple individuals and shell entities involved in the scam.
In January 2025, a special PMLA (Prevention of Money Laundering Act) court in Nagaland declared Bhupesh Arora, a key accused in the scam, as a fugitive economic offender. This declaration allowed the ED to confiscate and repatriate overseas assets worth about Rs 35 crore attached by it.
The ED continues to investigate the money trail and is reportedly looking into whether the payment gateways involved had generated Suspicious Transaction Reports (STR) and alerted the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU), as required.
However, Paytm, PayU and Razorpay have called the development factually incorrect and also denied receiving any notice, communication or query from ED on the matter.
In a stock exchange filing, Paytm said, “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 were not approached by the media for any clarifications prior to the publication of any of these media reports. There are factual inaccuracies in the reports concerning PayU, and we strongly refute any misrepresentations. At PayU, we remain committed to complying with all applicable laws and regulations and continue to uphold the highest standards of governance and transparency in all our operations,” said a PayU spokesperson.
A Razorpay spokesperson sent this statement, reacting to the news: “The recent news reports suggesting Razorpay is under scrutiny by the Enforcement Directorate (ED) are factually inaccurate and misleading. We have not received any new notices, communications, or inquiries from the ED related to the issues referenced in these articles. Furthermore, we were not approached by the media for comment before the publication of these reports. As a responsible and compliant corporate entity, we want to reiterate the fact that Razorpay has and will continue to hold ourselves to the highest level of governance and conduct.”