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Chinese Loan App Case: ED Freezes Rs 46.67 Crore Worth Funds Of Payment Gateway Apps


The Enforcement Directorate has carried out raids against Chinese “controlled” loan apps and investment tokens. The ED froze Rs. 46.67 cr. worth funds kept at the Bengaluru premise of payment gateways accounts of Easybuzz, Razorpay, Cashfree, and Paytm in connection with the HPZ token case over alleged irregularities in the operation of instant app-based loan-giving companies that are controlled by Chinese personals. The funds have been frozen and seized under the Prevention of Money Laundering Act (PMLA).

The investigation was carried out on September 14th at various business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow, and Gaya over the money laundering case probed against an app-based token named HPZ and related entities. The case is based on an FIR filed in October 2021, registered by the Kohima police’s cybercrime unit in Nagaland.

According to the ED, the HPZ token was an app-based token that lured victims to invest in the company, promising a doubling of their investments and large gains to the customers against investments by investing in mining machines in bitcoins and other cryptocurrencies.

“Payments were received from users through UPIs and other payment gateways/ nodal gateways/ individuals. Part amount was paid back to the investors and remaining amount was diverted to various individuals and company accounts through various payment gateways/ banks from where partly it was siphoned off in digital/virtual currencies. After that, the fraudsters stopped the payments and the website became inaccessible” states the ED.

Allegedly, the companies sourced the personal data of the victims at the time of downloading the loan apps even when their interest rates were “unsurious”. ED thus initiated a probe under the criminal sections of the PMLA after many debtors reportedly ended their lives. The debtors were being harassed and threatened by these loan app companies over the personal data available on their phones. The ED claims, that one such Loan app entity, labeled M/s Mad- Elephant Network Technology Private Limited in an agreement with X10 Financial Services Limited was operating several loan apps, namely Yo-Yo cash, Tufan Rupees, Coco cash, etc.) Similarly, Su Hui Technology Private Limited, in agreement with M/s Nimisha Finance India Private Limited, had operated loan apps.

In a meeting held on September 8, Finance Minister Nirmala Sitaraman reviewed the issues pertaining to the illegal loan apps. The meeting was attended by top officials from the ministry and RBI officials. It is being decided that appropriate measures shall be taken to check the operations of such apps. 

Security Breach Impacting 2.5 Million Users Revealed by Mortgage Servicer


In October, Lakeview Loan Servicing revealed a significant data breach that went unnoticed for more than a month and exposed the personal details of above 2 million customers. Any incident that leads to unauthorized access to data, applications, networks, or devices is referred to as a security breach. As a result, information is accessed without permission. It usually happens when an invader can get past security measures. 

The breach that was discovered in early December, harmed 2,537,261 borrowers between Oct. 27, 2021, and Dec. 7, 2021, as per the firm. According to public notice The letters, an unauthorized person gained access to the firm's servers and data, including names, addresses, loan information, and Social Security numbers. One of the notices described the occurrence as an "external system breach."

Mortgage servicers receive mortgage payments from homeowners and remit them to investors, tax officials, and insurers via escrow accounts. Investors' assets in mortgaged properties are also protected by servicers, who ensure the homeowners have enough insurance coverage. Customers have lodged eight class-action lawsuits in a Florida federal court since the servicer's revelation in mid-March, alleging Lakeview of breach of fiduciary responsibility, among other things, for failing to preserve personally identifiable information. In a complaint filed on behalf of Jennifer Morrill, a California client, Daniel Rosenthal, an advocate with DBR Law, P.A., said, "This PII was exposed due to Defendant's negligent, reckless, and willful acts and failures and the fails to secure the PII of Plaintiff and Class Members." 

According to Morrill's lawsuit, the sum at risk surpasses $5 million, and the proposed class has more than 100 members. In Morrill's case, a filing on Friday asks that the court cases be consolidated, pending a judge's consent. On Monday, Rosenthal declined to speak on the lawsuit. Lakeview refused to respond to the claims in a statement but said it contacted the proper third parties and people after discovering the incident. "Lakeview, like many other firms, encountered a security incident in 2021," according to the statement. "Steps were taken to contain the problem right once, law enforcement was alerted, and a forensic investigation firm conducted a comprehensive investigation." The operations of Lakeview were not hampered." 

According to a public document with the State Attorney General's Office made by an outside counsel for the firm, the servicer didn't witness a breach in the previous 12 months. Affected consumers received a free year of Kroll free credit and identity theft protection from Lakeview. The news comes amid an increase in fraud risk for mortgage lenders, who are more vulnerable to cyber attacks than other financial institutions. According to a new FundingShield Q1 2022 study, one out of every three transactions involves components of wire or title fraud risk, and wire errors and instances of perpetuated fraud are increased in about 6% of transactions. 

"Keep in mind," warned Ike Suri, chairman, and CEO of FundingShield, a loan and title fraud protection service. "And when it comes to these percentages, we're talking big figures." As per Security experts, the percentage of visitors affected by the Lakeview breach, as well as the volume of information exposed, was substantial. "It's a lot of data which will have repercussions on those people's current business and ongoing relationships, as well as the business itself," Suri said.

The operating assets to a mortgage loan are owned by Lakeview. They work with several Servicing companies to process payments, manage a trust, as well as provide customer support for their current mortgage. 

Chinese Banking Has A New Edge; Jack Ma Behind The Latest Developments!

Jack Ma is associated with one of the leading economies of the world.The risk management system employed by Jack Ma’s banking endeavors analyses over 3,000.

Per sources his company has lent around $290 billion to over 15 million small companies where the borrowing party could receive the cash almost immediately, with just a few taps.

The entire process requires no human forces and gets completed in around 3 minutes with a default rate of around 1%.

Earlier the small borrowers were rejected but thanks to MYbank and its associates the new form of payments is coming in real handy.

With the slow pace of China’s economy it gets imperative to keep a check on the risks and defaults.
Around two-third of the country’s small businesses couldn’t access loans, according to National Institution for Finance & Development.

But thanks to Jack Ma’s initiatives the lending and borrowing procedures of China are now seeing monumental growth.

Mybank’s lending app has created a real difference. By allowing the bank to access the store transaction data, some small loans have been covered.