ED's Rs 370 crore Vauld crypto freeze is now under PMLA appeal

What the Record Shows

In August 2022 the Directorate of Enforcement (ED), Bengaluru, froze assets of about Rs 370 crore held with the Flipvolt crypto exchange, operated in India under the Vauld brand by Yellow Tune Technologies Pvt Ltd and Flipvolt Technologies Pvt Ltd. The action was taken under the Prevention of Money Laundering Act (PMLA), 2002, as part of the agency's wider investigation into a group of instant-loan-app non-banking finance companies and their fintech partners.

According to the ED's account of that action, the frozen sum represented money that 23 entities had deposited into rupee wallets held with the exchange. The agency alleged the money was the proceeds of predatory app-based lending, converted into crypto assets on the platform and moved onward. The exchange, for its part, stated at the time that it had cooperated with the ED and supplied all the documents requested of it.

That freeze was not the end of the matter. An official court record now shows that the attachment was carried into the PMLA adjudication and appeal process. In an order dated 31 March 2026, the Telangana High Court recorded that Flipvolt Technologies Pvt Ltd has an appeal pending before the PMLA Appellate Tribunal, FPA-PMLA No. 5836/DLI/2023, and directed the tribunal to decide it within an outer limit of 45 days, noting it had been filed almost four years earlier.

A freeze or attachment under the PMLA is a preventive measure, not a finding of guilt. It secures assets while the investigation and the adjudication process run their course, and here it remains contested on appeal.

How It Worked

The exchange sat at what investigators describe as the exit layer of the alleged scheme rather than at its origin. The predicate conduct the ED was investigating lay with the instant-loan-app operators: app-based lenders, several of them said by the agency to be foreign-controlled, that advanced small short-tenure loans and, per the investigation, recovered far more through steep charges and aggressive collection.

Per the ED, the proceeds of that lending were then layered through the exchange. The agency alleged that the 23 entities deposited funds into rupee wallets on the platform, used them to buy crypto assets, and transferred those assets onward to wallet addresses the ED said it could not identify, several of them outside India. Once value leaves a domestic rupee account and becomes a crypto token sent to an unhosted foreign wallet, tracing it becomes far harder, which is the mechanism the agency was describing.

The ED's stated concern was the weakness of the controls that should have caught this: it cited an absence of adequate know-your-customer checks, transaction monitoring and source-of-funds verification at the exchange level. In 2022 crypto exchanges in India operated largely outside the formal anti-money-laundering perimeter, and this case, alongside the contemporaneous WazirX matter, became a reference point for how that gap could be used.

The procedural sequence that followed is what the official record now confirms: the provisional freeze of August 2022, its passage through the PMLA Adjudicating Authority, and an appeal by Flipvolt to the Appellate Tribunal registered in 2023 and still pending when the High Court intervened in March 2026 to set a deadline.

Who Lost Money

The people at the root of this matter are Indian borrowers of the instant-loan apps. Their repayments and, per the ED, amounts extorted from them through the apps' collection practices are what the agency traced as the proceeds it froze. The harm in these cases is widely distributed and small-ticket: large numbers of borrowers charged far above what they expected, rather than a single identifiable pool of investors.

The Rs 370 crore the ED froze is a measure of what the agency could trace and secure at the exchange layer, not a tally of what borrowers lost across the underlying apps. Frozen assets are also not the same as money returned. Under the PMLA, attached or frozen property is held while adjudication and any appeal proceed; because this attachment is itself under challenge before the Appellate Tribunal, no distribution arises unless and until the process concludes.

It is worth separating one thing that is often conflated with the enforcement action. Vauld suspended customer withdrawals in July 2022 and subsequently went through a restructuring process in Singapore. That was a solvency and insolvency event affecting the platform's own customers, and it is not a finding of wrongdoing and should not be read as one.

Where It Stands Now

The current position, on the official record, is that the matter is live and contested. The Telangana High Court's order of 31 March 2026 directs the PMLA Appellate Tribunal to decide Flipvolt's appeal against the attachment within 45 days. Until the tribunal rules, the attachment stands but is not final, and the outcome of the appeal is not something that can be predicted here.

No individual founder or director was named as an accused in any official action on this record, and the operating companies have not been convicted of any offence. The proceedings concern the attachment of assets and the allegations underlying it; they have not been tried to a verdict.

A freeze, an attachment and the allegations that support them contain claims, not findings of guilt. Any person or company named or affected is presumed innocent until proven guilty, and due process, here including a pending appeal, continues.

What It Means

The Vauld matter is the clearest early illustration of the crypto exchange as an exit ramp: the point at which domestic fraud proceeds could, the ED alleged, be turned into a portable token and sent abroad. The lesson enforcement drew from it was not about any one exchange but about the controls around all of them.

That gap has since narrowed on paper. In March 2023 the Union government brought virtual digital asset businesses, including exchanges, within the PMLA framework, requiring them to perform customer due diligence, monitor transactions and report suspicious activity in the way banks do. The practical significance of a case like this is that it shows what the absence of those obligations allowed, and why they were extended.

For an ordinary user, the takeaway is narrower and worth stating plainly. Assets held on an exchange can be frozen if the platform becomes part of an investigation, and can be locked up separately if the platform itself fails, as Vauld's withdrawal freeze showed. The Oquilia enforcement archive records how long such matters take to resolve; where the alleged proceeds trace back to app-based lending, the loan-trap explainer sets out how those apps operate and what borrowers can do, and the Falcon attachment case shows the same slow attachment-and-appeal path.

FAQ

Does this mean the people or companies named are guilty?

No. A freeze or attachment under the PMLA contains allegations, not findings of guilt. No individual was named as an accused on this record, and the companies have not been convicted. Everyone named or affected is presumed innocent until proven guilty, and due process, including a pending appeal, continues.

What exactly did the ED do?

In August 2022 the ED, Bengaluru, froze assets of about Rs 370 crore held with the Flipvolt/Vauld exchange under the PMLA, as part of its investigation into instant-loan-app operators. The agency stated the sum reflected funds that 23 entities had deposited into rupee wallets on the platform.

Is the freeze still in force?

On the official record, the attachment has been carried into the PMLA appeal process. The Telangana High Court on 31 March 2026 directed the Appellate Tribunal to decide Flipvolt's long-pending appeal within 45 days. The attachment stands but is contested and not final.

Did Vauld's withdrawal freeze have to do with the ED action?

They are separate. Vauld suspended withdrawals in July 2022 and later restructured in Singapore, which was a solvency event affecting its own customers. That is not a finding of wrongdoing and should not be conflated with the ED's attachment.

Are crypto exchanges now covered by anti-money-laundering rules?

Yes. In March 2023 the government brought virtual digital asset businesses, including exchanges, within the PMLA, requiring customer due diligence, transaction monitoring and suspicious-transaction reporting. This case predates those obligations and is part of why they were extended.

Where can I read the official record?

The Telangana High Court's order of 31 March 2026, directing the PMLA Appellate Tribunal to decide Flipvolt's appeal, is available on Indian Kanoon.

This report is based on the order of the Telangana High Court dated 31 March 2026 concerning Flipvolt's pending PMLA appeal, and the Enforcement Directorate's publicly reported August 2022 action, reviewed on 31 July 2026.