Sameer Hanuman Mhatre Vs Deputy Director (Appellate Tribunal Under SAFEMA Delhi)
SAFEMA Tribunal Sets Aside PMLA Freezing Orders Against WazirX and Vauld, Remands Matter for Fresh Adjudication
The Appellate Tribunal under SAFEMA set aside the Adjudicating Authority’s order permitting the retention of seized digital devices and continuation of freezing of bank accounts and crypto assets relating to WazirX (Zanmai Labs Pvt. Ltd.), its director Sameer Hanuman Mhatre, and Flypvolt Technology Pvt. Ltd. (Vauld) in connection with the ED’s investigation into the Chinese Instant Loan App scam. The Tribunal held that the Adjudicating Authority had failed to pass a reasoned or speaking order and had not adequately examined the rival contentions before allowing the ED’s applications under Section 17(4) of the PMLA.
The Tribunal observed that while the ED alleged that proceeds of crime generated through illegal loan applications had been routed through cryptocurrency platforms, the appellants consistently maintained that they merely operated cryptocurrency exchange platforms facilitating transactions between users and were not involved in the scheduled offences. Important issues—including whether the frozen funds and crypto assets actually represented proceeds of crime, the ownership of assets lying in pooled wallets, the extent of the exchanges’ control over those assets, the intermediary role of the platforms, and the impact on genuine third-party customers—had not been examined by the Adjudicating Authority.
Holding that these factual and legal questions required detailed adjudication, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for fresh consideration. Both parties were directed to appear before the Adjudicating Authority on 21 August 2026, which was instructed to conclude the proceedings within 180 days by passing a reasoned speaking order after considering all evidence and submissions.
Cases Discussed
- Internet and Mobile Association of India & Ors. vs. Reserve Bank of India (SC), (2020) 10 SCC 274
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
By these appeals under section 26 of Prevention of Money Laundering, 2002 (in short “the Act of 2002”), a challenge has been made to the order dated 27.01.2023 passed by Adjudicating Authority allowing the OA No.726/2022 and OA No.727/2022 filed under section 17(4) of the Act of 2002.
Brief facts of the case:
2. The present matter arises out of an application filed by the Assistant Director, Enforcement Directorate (ED), Hyderabad under Section 17(4) of the Prevention of Money Laundering Act, 2002 (PMLA), seeking retention of digital devices, records and continuation of freezing of bank accounts seized during a search conducted on 03.08.2022 at the premises of Shri Sameer Hanuman Mhatre, Director of M/s Zanmai Labs Pvt. Ltd. (popularly known as WazirX), situated at Hotel The Park, Raj Bhavan Road, Hyderabad and continuation of freezing of funds lying in various bank and virtual accounts, and retention of crypto assets held by M/s Flypvolt Technology Pvt. Ltd. (formerly Vauld) and M/s Yellow Tune Technologies Pvt. Ltd., pursuant to search operations conducted on 08.08.2022 and 10.08.2022.
3. The investigation originated from ECIR No. ECIR/HYZO/04/2021 recorded on 18.01.2021 on the basis of several FIRs registered by the Cyber Crime Police Stations of Rachakonda, Cyberabad and Hyderabad in connection with the investigation into the Chinese Instant Loan App case. The FIRs alleged that various instant loan mobile applications were cheating borrowers by charging exorbitant interest rates, excessive processing fees and penalties. It was further alleged that after disbursal of loans, the operators of such applications accessed personal data of borrowers, including contact lists, photographs and other sensitive information stored on their mobile phones, and used the same to harass, intimidate and blackmail borrowers and their relatives for recovery of loans.
4. During the search operation conducted under Section 17 of the PMLA, the ED seized two Apple MacBook Pro laptops and two mobile phones, namely an Apple iPhone 13 Pro Max and a Samsung Galaxy S22 Ultra. In addition, funds amounting to Rs. 64,67,41,053/- lying in the bank accounts of M/s Zanmai Labs Pvt. Ltd. maintained with IDBI Bank and IDFC First Bank were frozen. The proceeds of crime amounting to approximately ₹369.98 crore generated by various Fintech companies were routed to M/s Yellow Tune Technologies Pvt. Ltd. and subsequently utilized for purchase and transfer of crypto assets through M/s Flypvolt. The ED sought retention of the seized devices and continuation of freezing of the aforesaid funds on the ground that they constituted evidence relating to money laundering and represented proceeds of crime.
5. The offences under Sections 417, 419 and 420 IPC constituted scheduled offences under the Act of 2002, thereby giving rise to investigation under the Act of 2002.
6. During investigation, it was revealed that the functioning of various Non-Banking Financial Companies (NBFCs) and their associated fintech entities involved in the instant loan application ecosystem. It was alleged that several fintech companies controlled the lending operations through mobile applications, while NBFCs provided regulatory cover. According to the ED, the fintech companies controlled the loan disbursement process through virtual accounts, collected sensitive personal information from borrowers and employed coercive recovery methods. It was further alleged that bank account transactions of various NBFCs and Fintech companies allegedly involved in the instant loan app ecosystem. It was noticed that several such entities had substantial financial dealings with M/s Wunderbaked Technologies Pvt. Ltd. (Hypto), a payment gateway. On the basis of information furnished by Hypto, it was revealed that M/s Flypvolt Technology Pvt. Ltd., a cryptocurrency exchange platform, had facilitated transactions involving entities under investigation.
7. Further investigation disclosed that M/s Yellow Tune Technologies Pvt. Ltd. maintained accounts with Flypvolt and had allegedly received substantial funds from various NBFCs and Fintech companies which were under investigation in the instant loan app case. According to the Directorate, Yellow Tune had deposited approximately ₹5,100 crore on the platform and purchased USDT (Tether) worth approximately ₹5,082 crore, which was thereafter transferred to multiple external wallet addresses without any corresponding sale transactions. The funds generated through such illegal activities were treated by the ED as proceeds of crime.
8. In order to trace the movement of these funds, the ED summoned Shri Sameer Hanumant Mhatre, Director of M/s Zanmai Labs Pvt. Ltd. and recorded his statements under Section 50 of the Act of 2002 on 02.08.2022 and 03.08.2022. During his examination, the ED scrutinized the role of WazirX, a cryptocurrency exchange platform operated through M/s Zanmai Labs Pvt. Ltd.
9. The statements made by Shri Mhatre revealed that WazirX operated through a complex arrangement involving M/s Zanmai Labs Pvt. Ltd., Zettai Pte Ltd. (Singapore) and Binance entities, which allegedly obscured the ownership and control of the intellectual property and operational structure of the platform. The ED observed that the statements of Shri Mhatre were inconsistent with earlier statements made by another director, Shri Nischal Shetty, particularly regarding ownership, operational control and execution of cryptocurrency transactions on the platform.
10. It was further alleged that despite repeated summons and sufficient opportunities, Shri Mhatre failed to furnish complete transaction details relating to NBFCs and fintech companies involved in the instant loan app investigations. It was also noted that Shri Mhatre admitted that prior to December 2020, WazirX did not maintain complete details regarding the source bank accounts from which funds were received. According to the ED, he further acknowledged the possibility that the platform may have inadvertently facilitated money laundering activities and cross-border hawala transactions.
11. The investigation allegedly revealed that proceeds of crime amounting to Rs. 86,30,55,528/- had been transferred from entities associated with the instant loan app scam to M/s Zanmai Labs Pvt. Ltd. Out of this amount, approximately Rs. 21,63,14,475/ had been returned, while a sum of Rs.64,67,41,053/-remained in the accounts of M/s Zanmai Labs Pvt. Ltd. The ED alleged that these funds represented proceeds of crime generated through the illegal lending operations and had ultimately been routed to the WazirX platform.
12. It was further contended that M/s Zanmai Labs Pvt. Ltd. had received funds from sixteen entities and individuals allegedly involved in the instant loan app scam. According to the investigation, the respondent failed to satisfactorily explain the nature and purpose of these transactions, whether the funds remained in fiat form, or whether they had been converted into cryptocurrency assets. The ED also alleged that the respondent was not fully cooperating with the investigation and had thereby assisted the principal accused persons in laundering the proceeds of crime. The frozen funds were alleged to constitute proceeds of crime directly or indirectly derived from criminal activities associated with the instant loan app scam.
Arguments of the Ld. Counsel for the appellant Shri Sameer Hanuman Mhatre:
13. The Counsel for the Appellant submitted that the Impugned Order and the freezing and seizure orders are unsustainable in law and liable to be set aside. The Impugned Order has been passed mechanically, without proper application of mind and in violation of the principles of natural justice. The Learned Adjudicating Authority has merely reproduced selective portions of the Original Application and has proceeded to allow the retention without recording any independent findings or reasons demonstrating how the properties in question constitute “proceeds of crime” as required under Section 8 of the Act of 2002. The retention of the seized digital devices and records and continuation of lien on the appellant’s frozen bank accounts maintained with IDBI Bank and IDFC First Bank to the extent of Rs.64,67,41,053/-.
14. The Counsel for the appellant further submitted that the search and seizure conducted by the respondent was not in accordance with Section 17 of the Act of 2002. The Impugned Order merely notes filing of the reply by the Appellant but neither consider the submissions made therein nor does it provide any reasons as to why the explanations offered by the appellant were unsatisfactory. Such an approach is contrary to the statutory mandate and renders the Impugned Order arbitrary and unreasoned.
15. The Counsel for the appellant further submitted that the alleged proceeds of crime had already moved beyond its control in the year 2021 itself i.e. much before any summons or notice by the Respondent. Out of the alleged amount, only Rs.92,99,570/- remains with the Appellant. The Appellant had, as early as August 2022, furnished all relevant information and documents sought by the respondent, including transaction details, KYC records, and destination wallet addresses to which the alleged proceeds were transferred. Any inability to provide details of the destination exchange cannot be attributed to wilful non-compliance on the part of the appellant, as the destination wallets may have been private wallets not hosted on any cryptocurrency exchange. It is also significant that the respondent has nowhere alleged that the appellant was involved, either actively or passively in the commission of the scheduled offences under investigation. This is further evidenced by the fact that neither the appellant nor any of its directors or employees have been arrayed as accused in the Prosecution Complaint filed before the Special Court.
16. The Counsel for the appellant further submitted that the appellant is merely an intermediary and facilitator of transactions involving virtual digital assets and cryptocurrency tokens. It operates only as a platform enabling users to undertake cryptocurrency transactions. This position has been noted by this Hon’ble Tribunal in its order dated 01 December 2025 and was also admitted by the learned counsel appearing for the respondent during the hearing held on 21 April 2026. In such circumstances, the appellant is entitled to the protection afforded to intermediaries under Section 79 of the Information Technology Act, 2000, and cannot be held liable for transactions undertaken by third-party users on its platform. The prayer was accordingly made to set-aside the impugned order.
Submissions on Behalf of the Appellant (M/s Flypvolt Technology Pvt. Ltd.)
17. The Counsel for the appellant submitted that the Appellant provided merely a cryptocurrency exchange platform facilitating purchase and sale of digital assets between users and did not itself own or control the funds deposited by its customers.
18. It was argued that customers of the Appellant deposit fiat currency (INR) into wallets maintained on the platform as an advance for purchasing digital assets. Upon receipt of purchase orders, the Appellant merely matches buyers and sellers and facilitates execution of trades. According to the counsel of the Appellant, Yellow Tune placed approximately 355 purchase orders aggregating to about ₹25 crore. In fulfilment of those orders, the Appellant delivered approximately 638.32 million USDT to Yellow Tune. The transactions were executed in the ordinary course of business and strictly in accordance with the functioning of the exchange platform. It was submitted that the documentary evidence placed on record clearly demonstrated that the monies deposited by M/s Yellow Tune Technologies Pvt. Ltd. were utilized for the purchase of USDT (Tether) and stood transferred to third-party sellers through various channels, including WazirX, Bitbns and other users of the platform. The transaction records, particularly File No. 4, allegedly established that the funds had moved out of the virtual account maintained with the Appellant and were credited to the accounts of the sellers of USDT. Therefore, the Appellant was not in possession of any portion of the funds deposited by M/s Yellow Tune Technologies Pvt. Ltd..
19. The Counsel for the appellant further submitted that the there was no material to demonstrate that the Appellant had any knowledge regarding the alleged tainted funds deposited by Yellow Tune or any other entity. The Appellant neither participated in nor assisted any alleged money laundering activity and merely acted as an intermediary facilitating cryptocurrency transactions. The Appellant further submitted that freezing of its bank accounts and crypto assets was arbitrary and caused severe prejudice to its business operations. It was further argued that the freezing action undertaken by the Directorate of Enforcement had caused grave prejudice to the Appellant’s business and adversely affected thousands of genuine customers of the platform. According to the Appellant, the crypto assets lying in the pool wallets were not owned by the Appellant but belonged to individual customers who had completed KYC formalities and purchased the crypto assets through the platform. It was submitted that these customers had no connection whatsoever with M/s Yellow Tune Technologies Pvt. Ltd. or with the alleged offence of money laundering. The freezing of such assets had resulted in severe hardship to the customers, who had lodged numerous complaints seeking release of their investments.
20. It was vehemently argued that no material had been produced by the respondent to establish any nexus between the pool wallet assets valued at approximately ₹26 crore and the alleged proceeds of crime generated by M/s Yellow Tune Technologies Pvt. Ltd. According to the Appellant, the respondent had mechanically frozen the pool wallets merely because the alleged proceeds of crime were estimated at around ₹370 crore, without tracing the actual source of the assets lying in the pool wallets or establishing any connection between those assets and the alleged offence.
21. The counsel for the appellant also submitted that no nexus had been established between the Appellant and the alleged proceeds of crime. It was also submitted that the “reason to believe” recorded by the authorised officer did not satisfy the statutory requirement under Section 17 of the PMLA, as there was no material connecting the Appellant with the offence of money laundering.
22. The counsel for the appellant further submitted that M/s Yellow Tune Technologies Pvt. Ltd. had been off-boarded from the Appellant’s platform within approximately one month of commencing transactions, as the respondent had noticed large-value transactions originating from multiple sources and had not received satisfactory explanations regarding the source of such funds. The said entity had transacted on the platform only during the period from December 2020 to January 2021. After purchasing USDT, it withdrew the cryptocurrencies to external wallets and exchanges. Thereafter, the Appellant had no control over the movement or utilization of such crypto assets.
23. Accordingly, the prayer was accordingly made to set-aside the impugned order.
Arguments of the Ld. Counsel for the respondent:
24. The Counsel for the respondent contested the appeal on all the grounds raised by the appellant. Elaborate arguments on each issue were made and would be discussed while recording finding to avoid bulkiness of the order by repeating the same facts.
Findings of the Tribunal:
25. I have considered the rival submissions made by the Ld. Counsel for the parties and scanned the records carefully. The brief facts pertaining to the case has been given in the opening paras of this order. A number of FIRs were registered in different police stations. So far as the present case is concerned, it was registered with Cyber Crime Police Stations of Rachakonda, Cyberabad and Hyderabad. It was alleged that various instant loan mobile applications were floated to attract borrowers for loan and once borrower would apply and take the instant loan, he would suffer towards exorbitant interest rates, excessive processing fee and penalties. It is coupled with different types of harassment and torture for recovery of the amount. In one case before the Tribunal, it was brought to the notice that many borrower applicants had committed suicide due to modus operandi of recovery by the fintech companies involved for disbursement of instant loan. For the aforesaid purpose, Fintech company engaged themselves with the Non-Banking Financial Companies (NBFCs) and taken to work of the NBFC though not permissible. After extending the instant loan by the Fintech company, it would engage service providers to recover the amount by causing all sorts of harassment and torture. The allegation does not exist against the appellant company, rather, it is largely against the fintech companies and service provider with NBFCs involved in commission of crime but it remains facilitator for laundering of money.
26. In the investigation, it was found that several fintech companies controlled the lending operations through mobile applications, while NBFCs were merely provided regulatory cover and accordingly the respondent found that the fintech companies controlled the loan disbursement process through virtual accounts, collected sensitive personal information of the borrower and employed coercive recovery methods. The funds generated through such illegal activities were treated proceeds of crime by the Enforcement Directorate.
27. So far as the appellant company is concerned, it has been clarified that they are not involved in the process of extending the loan but money collected out of commission of crime were transacted through its platform. The respondent accordingly made scrutiny of the platform namely, WazirX to provide exchange of cryptocurrencies through M/s Zanmai Labs Pvt. Ltd. The case of the respondent is to secure the amount of proceeds of crime till completion of the trial. They conducted search on the premises of the appellant’s company and seized digital devices apart from the funds of Rs.64,67,41,053/- lying in the account of M/s Zanmai Labs Pvt. Ltd. The frozen amount has been allowed to be retained by the Adjudicating Authority finding that the proceeds of crime is otherwise of Rs.86,30,55,528/- as against the aforesaid, the amount to the extent of Rs.64,67,41,053/- has been frozen. Out of total amount of 86,30,55,528/. approximately Rs.21,63,14,475/-has been returned by the appellant company. On further scrutiny, the respondent could find that the funds were received by the appellant company from 16 entities and individuals involved in the instant loan applications scam. The appellant was summoned many times to get the information about the entities or individuals used the platform but the appellant said to have remained non-cooperative at times, though, subsequently his statements were recorded. The details of the entities /individuals used the platform for crypto currency was not disclosed as was requested by the Enforcement Directorate. Thus, the amount representing the proceeds of crime has been frozen. On the Original Application under Section 17(4) of the Act of 2002, the Adjudicating Authority allowed the retention of freezed amount and aggrieved by the aforesaid, this appeal has been preferred.
28. Ld. Counsel for the appellant submitted that the appellant company is not involved in commission of crime, rather, it provided platform for transfer of cryptocurrencies which is permissible in the light of the judgment of the Hon’ble Supreme Court in the matter of Internet and Mobile Association of India & Ors. vs. Reserve Bank of India reported in (2020) 10 SCC 274. The appellant company has provided the exchange platform for trading virtual currencies / cryptocurrencies permissible under the law. The fact aforesaid has been ignored by the respondent while causing freezing of the bank account to the extent of the amount indicated earlier.
29. Ld. Counsel for the appellant, further, submitted that as per Zanmai Labs understanding, Binance Investments Co. Ltd. is engaged in the business of operating an Internet Platform (or exchange) enabling the buying and selling of crypto assets/ cryptocurrencies / virtual currencies/ digital assets. Binance’s trading platforms are accessible on the world wide web and are also accessible through mobile applications. Such platforms, including the associated mobile applications are “Binance Exchange” or “Binance”. Zanmai Labs is not owned or controlled by Binance and does not have any common shareholders or directors with Binance and as such, Binance is a third-party as far as Zanmai Labs is concerned.
30. One of the CC trading exchanges primarily operated by Binance is known by the name ‘ WazirX’. The WazirX platform, like the Binance Exchange, is primarily owned and controlled by Binance. Accordingly, the word ‘ WazirX’ cannot be used interchangeably with Zanmai Labs. The activities managed and operated by Zanmai Labs on the WazirX Platform are very limited in nature and are set out under a specific license and distribution agreement, technology assignment agreement and terms of use.
31 Ld. Counsel for the appellant, further, made reference to the License and Distribution Agreement between Zanmai Labs and Binance where the appellant company was engaged as the distributor in connection with WazirX which can be used for the exchange of currencies. The appellant’s role, though, remained limited only for operating trading services between INR and Cryptocurrencies. The appellant company is, thus, a facilitator for exchange of cryptocurrencies and the platform is used for different parties of which appellant company cannot have control for onward transfer of the money once it is routed through the platform. The respondent ignored the aforesaid despite clarification given on freezing of the bank accounts which does not represent the proceeds of crime. In fact, the appellant himself volunteer with information that out of the total amount frozen by the respondent, a sum of Rs.92,99,570/-can be continued under it but there remains no justification to continue the freezing of the remaining amount and accordingly the prayer was made to cause interference in the impugned order.
32. The argument aforesaid would be considered but before that I may, refer to the effort of the respondent to cause summons to the appellant to get required details about the transactions and to reach to the entities which transferred the money after involving them in crime where the innocent persons were cheated in the name of instant loan through mobile applications. The appellant said to be non-cooperative, though, perusal of the appeal shows that a proper opportunity for it was not given. The appellant has further made an allegation that the impugned order has been passed without a detailed reasoned order in view of the fact that the Adjudicating Authority has reproduced selective portions of the Original Application and proceeded to allow retention and continuance of the freezed bank account. It is with the further allegation that search and seizure was not conducted as per Section 17 of the Act of 2002. The impugned order passed by the Adjudicating Authority makes a reference of the reply of the appellant but it does not consider the submissions made therein.
33. In light of the aforesaid, the prayer was made to cause interference in the impugned order which was seriously opposed by the Ld. Counsel for the respondent.
34. I have carefully perused the records and find that after registration of the FIR against the fintech companies and NBFCs, the respondent caused the investigation to find out money-trail to protect the money involved in the crime. The appellant’s premises were searched where digital devices were seized followed by freezing of the bank accounts to the extent of a sum of Rs.64,67,41,053/-. It was in the light of the fact that the platform to convert INR to Cryptocurrencies was used for transfer of crime money by the accused and accordingly the appellant company was taken to cause transfer of crime money to other destinations. The appellant was summoned to find out the details of the entities with complete whereabouts so as to reach to them but the appellant has initially did not respond to the summons sent by the respondent and later on he submitted the details but according to the respondent, complete details of 16 entities and individuals has not been given in regard to the transactions and siphoning of or laundered the proceeds of crime. The case of the appellant company is, however, is that to the extent that they were having the information, it was provided, because prior to year 2021 no such information was kept in record.
35. The facts given above are relevant because the effort of the respondent is to protect the crime money where innocent people were cheated and for the aforesaid, the appellant company was expected to disclose the whereabouts of those who were making transactions on their platform. They cannot plead non-availability of the information only for the reason that the crime money was transacted much prior to search. In fact, if matter is taken strictly in accordance with the law, a case under Section 3 of the Act of 2002 is made for concealment and transfer of the crime money. In any case, I find that the impugned order passed by the Adjudicating Authority does not deal with any of the issue which has been taken by the appellant in detail while filing the appeal and it is not only the process involving conversion of INR to Cryptocurrencies and its transfer but how the platform is used and to what extent the appellant company was having a command on it.
36. In view of the above, I find it to be a fit case to remand the matter back to the Adjudicating Authority to decide the case afresh after dealing with the issues taken up by the both the parties. The appellant would be at the liberty to share the information to the extent it is available because even after freezing of the huge amount of Rs.64,67,41,053/- nobody other than the appellant has come forward to make a claim. It is more so when the appellant is said to be providing platform for exchange of INR to Cryptocurrencies and thereby, they are into the trading with margin of profit. However, I would not make comment on the aforesaid as the matter is remanded back to the Adjudicating Authority.
37. Accordingly, I cause interference in the impugned order passed by the Adjudicating Authority and is set-aside giving chance to both the parties to plead and substantiate their rival claims and for the aforesaid both the parties are directed to appear before the Adjudicating Authority on 08.2026.The proceedings thereupon would be concluded within a period of 180 days. The Adjudicating Authority would be expected to pass the speaking order.
In the case of M/s Flypvolt Technology Pvt. Ltd.
38. It was submitted that investigation established that approximately ₹98 crore constituting proceeds of crime was transferred from twenty-three accused Fintech and NBFC entities to M/s Yellow Tune Technologies Pvt. Ltd., which thereafter purchased crypto assets through the platform operated by the Appellant. According to the respondent, Yellow Tune was one of the largest INR depositors and cryptocurrency withdrawers on the Appellant’s platform. The company allegedly purchased large quantities of USDT and transferred the same to multiple external wallet addresses without undertaking any sale transactions, thereby facilitating movement of funds beyond the conventional banking system. Despite receiving funds originating from entities involved in the instant loan app fraud, provided crypto assets to Yellow Tune and thereby facilitated conversion and transfer of proceeds of crime. This transactions, assisted the accused entities in parking funds outside India and constituted activities connected with the process of money laundering.
39. So far as the appellant M/s Flypvolt Technology Pvt. Ltd. is concerned, the allegation against it is not that it was involved in the commission of the scheduled offence relating to the instant loan application scam and for that its platform was allegedly utilized for purchase, transfer and movement of crypto assets acquired from funds suspected to be proceeds of crime. The appellant has consistently maintained that it operates merely as a cryptocurrency exchange platform facilitating transactions between users and that the funds deposited by M/s Yellow Tune Technologies Pvt. Ltd. were utilized for purchase of USDT, which was thereafter transferred to external wallets. According to the appellant, the crypto assets lying in the pool wallets belong to various customers and not to the appellant itself. I find that the aforesaid issues require a detailed examination on facts as well as law. The Adjudicating Authority, while allowing the Original Application, has not recorded any specific finding regarding the ownership of the crypto assets lying in the pool wallets, the extent of control exercised by the appellant over such assets, the nature of the relationship between the appellant and the account holder, or the nexus between the frozen assets and the alleged proceeds of crime. Equally, there is no discussion as to whether the assets sought to be retained represent identifiable proceeds of crime or whether they belong to third parties who are not alleged to be connected with the scheduled offence. I find that serious issues have been raised by the appellant regarding the ownership and nature of the crypto assets lying in the pool wallets, the extent of control exercised by the appellant over such assets, the existence of any nexus between the frozen assets and the alleged proceeds of crime and the appellant’s knowledge, if any, regarding the alleged tainted transactions. The appellant has further questioned the validity of the action taken under Section 17 of the Act of 2002 and has contended that no material has been brought on record to establish its involvement in any process or activity connected with money laundering.
40. A perusal of the Impugned Order shows that the aforesaid issues have not been examined in detail by the Learned Adjudicating Authority. No specific findings have been recorded regarding the ownership of the crypto assets, the claim of the appellant that it merely acted as an intermediary platform, the alleged connection between the frozen assets and the proceeds of crime, or the effect of the freezing action upon third-party customers stated to be holding assets through the platform.
41. The issue assumes significance in view of the appellant’s submission that it was functioning as an intermediary platform and that the crypto assets purchased by the users stood transferred outside its control. Whether such submission is factually correct, whether the appellant had knowledge of the alleged tainted transactions, and whether the frozen assets are liable to be retained under the provisions of the Act of 2002 are matters requiring proper adjudication on the basis of evidence available on record. However, the impugned order does not deal with these issues in the manner required by law and lacks specific findings on the material questions raised by the parties.
42. In the absence of a reasoned consideration of the aforesaid aspects, it would not be appropriate for this Tribunal to record conclusive findings for the first time in appeal. The interests of justice would therefore require that the matter relating to M/s Flypvolt Technology Pvt. Ltd. and Shri Sameer Hanuman Mhatre be reconsidered by the Adjudicating Authority after examining all relevant material and submissions of the parties and by recording specific findings on each of the issues noticed above. This is more in the style of a Tribunal’s reasoning: it identifies the legal deficiencies in the impugned order, points out the unanswered questions, and justifies remand without appearing to prejudge the merits.
43. In view of the above and for the reasons recorded hereinbefore, I am of the opinion that the matter deserves to be remanded to the Learned Adjudicating Authority for fresh consideration.
44. Accordingly, I cause interference in the impugned order passed by the Adjudicating Authority and is set-aside giving chance to both the parties to plead and substantiate their rival claims and for the aforesaid both the parties are directed to appear before the Adjudicating Authority on 08.2026.The proceedings thereupon would be concluded within a period of 180 days. The Adjudicating Authority would be expected to pass the speaking order.
45. The appeals are disposed of with the aforesaid.
