IPO Fraud: ED has raided the premises of Varanium Cloud Limited and its promoter Harshvardhan Sable in Mumbai. The company is accused of defrauding investors by raising Rs 40 crore through IPO in September 2022.
Varanium Cloud Ltd ED Raid: The Enforcement Directorate (ED) has raided several locations in Mumbai on Tuesday. This action has been taken against Varanium Cloud Limited, which defrauded investors by making false promises of opening data and digital learning centers in small towns. Money laundering investigation is going on against the company’s promoter Harshvardhan Sable and other units associated with him. Learn about the case in detail
How did the IPO fraud happen?
According to ED, Varanium Cloud Limited had raised about Rs 40 crore through an IPO in September 2022. The company had claimed that this money would be used to build edge data centers and digital learning centres. But investigation revealed that the company did not fulfill any of its promises, instead misappropriated funds and falsely inflated its turnover and market value through fraudulent transactions and circular fund movements.
Pump and dump scheme exposed
The investigating agency said that the company cheated investors through a pump and dump scheme. In this, first the prices of the company’s shares were increased, so that the investment enthusiasm among the people increased. When prices reached high levels, promoters and their associates sold shares on a large scale, causing huge losses to common investors.
Network of fake accounts and dummy companies
Many shocking evidences have been found during the ED raid. A wide network of fake accounts operating from Mumbai, more than 400 check books which were linked to fake bank accounts. More than 200 SIM cards and more than 100 mobile phones, which were used to hide the movement of money. Apart from this, illegal money was diverted through more than 150 shell (dummy) companies. These fake accounts and companies were being used for money laundering, so that the real source of money could be hidden.
This is how the entire racket was run
ED investigation has revealed that this entire racket was being operated from some small rooms, which are called ‘Drawer Companies’. From here, a game worth crores was being played by misleading people through fake identities, mule bank accounts and proxy communication channels. Laptops, hard drives and digital evidence have also been seized in the raid, which has revealed the names of many more companies and people.
Keeping an eye on ED’s next action
ED said that many other people and companies are also under investigation. This raid has been conducted under PMLA (Prevention of Money Laundering Act), 2002. Further investigation is also being done to find out into which accounts and to which projects the money raised from the IPO was diverted.
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