PAYTM Shares suffered a quick decline during the trading session as fake news about cryptocurrency scam investigation surfaced online. The company issued a clarification but the stock had already suffered a major plunge to Rs 773 during the session. PAYTM recovered from the lows but the stock closed the session 5.2 percent lower at Rs 805. At the current levels, it is looking bearish on technical charts and a quick recovery from current levels could offer positive momentum for the stock.

Shares of One 97 Communications Ltd, which owns the Paytm brand, faced significant pressure but the company has firmly denied these allegations, terming the reports "factually incorrect and misleading." The stock dropped sharply during intra-day trading but partially recovered after Paytm issued clarifications, assuring stakeholders of its compliance with regulations and distancing itself from the reported matter.

Paytm Shares Witness Steep Decline

Stock Performance on the BSE and NSE

On Friday, shares of One 97 Communications Ltd dropped 4.85% to close at Rs. 807.75 on the BSE.
The stock experienced an intra-day low of Rs. 773.90, marking an 8.84% decline.
Similarly, on the NSE, the stock fell 4.90% to settle at Rs. 807.45, with an intra-day low of Rs. 773.05, representing an 8.95% decline.
This sharp decline was attributed to media reports claiming that Paytm was under investigation for a crypto-related scam.

BSE Seeks Clarification from Paytm

Exchange’s Inquiry
Earlier in the day, the BSE sought clarification from One 97 Communications Ltd regarding media reports that alleged a crypto scam probe involving Paytm and others. The reports also claimed that the Enforcement Directorate (ED) had frozen Rs. 500 crore as part of its investigation.

Paytm Denies Allegations, Issues Clarification

Response to Allegations
In its response, Paytm firmly refuted the claims made in the media reports:

The company stated, "We confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles."
It described the reports as "factually incorrect and misleading", emphasizing that no media outlet contacted the company for clarification prior to publication.
Historical Context of ED Inquiries
Paytm further clarified that the current media reports seem to pertain to older investigations involving third-party merchants:

The company referred to its letter dated September 4, 2022, which addressed search operations conducted by the ED on certain merchants for whom Paytm provided payment processing solutions.
Paytm confirmed that these merchants are independent entities and are not part of the Paytm group.

Paytm’s Stance on Compliance and Cooperation

Cooperation with Authorities
The company reiterated its commitment to compliance and regulatory cooperation:

Paytm stated, "We had fully cooperated with the authorities and had complied with all their directives."
It further clarified that there is no ongoing probe into the company or its subsidiaries. The investigations are solely focused on third-party merchants.
Call for Caution Among Stakeholders
Paytm urged investors and stakeholders to avoid reliance on unverified reports:

"We urge investors and stakeholders not to rely on unverified media reports," the company said.
It assured stakeholders that any material developments would be promptly disclosed in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Broader Implications for Investors

Impact of Unverified Media Reports
This incident highlights the potential volatility caused by unverified media reports, particularly for companies with a large public presence like Paytm. Market reactions to such reports can result in significant stock fluctuations, impacting investor confidence in the short term.

Paytm’s Communication Strategy
By promptly issuing a detailed clarification, Paytm demonstrated its commitment to transparency and regulatory compliance, a move that may help restore investor trust.