The Enforcement Directorate’s (ED) Bengaluru cell is currently searching the premises of Indian cryptocurrency exchange CoinSwitch Kuber.
"We are looking into multiple possible contraventions under FEMA and other entities that are connected to it. Since we did not receive the desired cooperation, we have conducted searches on (residences) of directors, the CEO and the official premises of the exchange,” an ED official told Coindesk.
ED is currently searching five premises which are tied to CoinSwitch Kuber in alleged contravention under the Foreign Exchange Management Act (FEMA).
A CoinSwitch spokesperson said to IANS about the raids by ED, “Our approach has always been that of transparency. Crypto is an early-stage industry with a lot of potential and we continuously engage with all stakeholders.”
According to media reports, top executives of cryptocurrency exchange CoinSwitch Kuber left the company in July. These high profile exits include Sharan Nair, chief business officer and Krishna Hegde, chief financial officer and senior executive. It was reported that they left CoinSwitch Kuber to start their own business venture.
Sharan Nair said at that time, “We are super passionate about crypto and we believe it is here to stay. We will continue to take guidance from the CoinSwitch team, which has been my home turf for the last 4+ years as we build India into the Web 3.0 hub of the world.”
Earlier last month, Indian crypto exchange WazirX was under the scanner after it was reported that ED is conducting a separate investigation into Zanmai Labs, the Indian operator of cryptocurrency exchange WazirX. This led to the ED issuing an order to freeze the bank account of WazirX to the tune of Rs 64.67 crore.
Pankaj Chaudhary, Minister of State for Finance told in Rajya Sabha last month that WazirX has been probed by ED for cases relating to violation of Foreign Exchange Management Act, 1999 (FEMA), according to a report by the PTI.
Chaudhary said in a written response to Parliament that in one of the investigations it was found out that cryptocurrency exchange WazirX used “walled infrastructure of Cayman Island-based exchange BINANCE”. Further it was found out that the blockchains had “no record of transactions between the two exchanges,” said the Minister.
ED also conducted searches last month in various premises of Yellow Tune Technologies in Bengaluru and froze assets related to the Singapore-based crypto exchange Vauld which is run by Darshan Bathija.
According to various media sources, these moves by ED on major cryptocurrency exchanges are part of a larger crackdown. It was reported by ET sources that ED is probing more than 10 cryptocurrency exchanges for alleged money laundering by various fake instant loan Chinese apps.
According to the same report by ET, ED found that several of these fake loan apps approached crypto exchanges to buy cryptocurrencies and then send them to international wallets. The ED found out that these Indian cryptocurrency exchanges did not conduct any enhanced due diligence and did not raise suspicious transaction reports.