What is loan app fraud?

Various fintech companies backed by Chinese funds could not get an NBFC license from the RBI for carrying out lending business in India, so they devised the MoU route with defunct NBFCs to piggyback on their license and started disbursing loans through mobile apps. These Chinese fintech entities employ telecallers who misuse personal data and use abusive language to extort high-interest rates from the loan takers.

After the criminal investigation began, many Chinese Apps shut shop and diverted the huge profits earned through extortion tactics, out of India. While doing a fund trail investigation, the ED found a large number of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad. Most of these funds, says the ED, were diverted via the WazirX exchange and then diverted to unknown foreign wallets. Later, the company said it had no idea about the purpose of such transactions on its platform, and that the platform, like any other platform, could have been "misused". The company said it has no association with any of the alleged accused fintech and instant loan app entities, which appear to be the subject of the ED probe.

What is crypto winter?

If we see the value of every significant crypto in the first half of 2022, they have consistently dropped. A handful of crypto-related companies are facing severe financial difficulties, including bankruptcy. This period of market cooling is known as “crypto winter.” Like other asset classes, the crypto market also saw a huge sell-off this year. From a market valuation of $2.7 trillion on November 7, 2021, the m-cap of the top 100 cryptocurrencies on July 24, 2022, reduced to $1 trillion, a 62% decline.

"Winters in the crypto market might be depressing but bear in mind that bull markets also follow bear markets. The stock market’s prices have continually risen throughout history, as seen. Cryptos can be quite volatile, but this sector has always bounced back and done exceptionally well," said WazirX.

ED raids Wazirx

WazirX lays off 40% staff to weather crypto winter