The Enforcement Directorate (ED) has launched an extensive investigation into Varanium Cloud Ltd, following allegations of large-scale financial irregularities tied to its Rs. 40 crore IPO raised in September 2022. The IPO proceeds were reportedly meant to establish edge data centres and digital learning hubs in smaller towns, but the projects were never executed.
On 29th October, the ED’s Headquarters Investigation Unit in New Delhi conducted search operations at multiple locations in Mumbai under the Prevention of Money Laundering Act (PMLA), 2002. The action targeted Varanium Cloud, its promoter Harshavardhan Sabale, and associated entities. The agency stated that credible intelligence pointed to manipulated financial records, circular fund movements, and suspected laundering of Proceeds of Crime.
According to ED officials, funds from the IPO were diverted through false transactions and circular routing, used to artificially inflate turnover and market valuation. The company allegedly engaged in a “pump and dump” scheme — inflating stock prices through misleading claims before offloading shares at high valuations, resulting in losses to genuine investors.
The probe also uncovered a network of mule bank accounts and dummy companies used for laundering activities. Preliminary findings show over 400 cheque books, 200 SIM cards, and 100 dual-SIM phones were seized from Mumbai premises. These accounts were linked to 150 shell and dummy firms employed to conceal fund trails.
The ED further recovered electronic devices, laptops, and hard drives carrying incriminating evidence. Investigators revealed that the operations were run through small offices functioning as “Drawer companies,” which created fake identities, mule accounts, and proxy communications to dupe investors and legitimize illicit funds.
The agency confirmed that multiple individuals and connected entities remain under scrutiny, as the probe continues to trace the broader network behind the fraudulent IPO-linked laundering scheme.
