The Enforcement Directorate (ED) searched the premises of crypto exchange CoinSwitch Kuber for alleged Foreign Exchange Management Act (FEMA) violations. The company has, however, responseded saying, “We receive queries from various government agencies…”
Neither confirming nor denying the searches, in its statement, the company said, “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 reports, ED has conducted searches at five locations tied to CoinSwitch Kuber on FEMA violations. The law enforcement agency is reportedly looking at many potential violations under FEMA and other related entities. The ED said, it has decided to search CoinSwitch premises because it didn’t receive enough cooperation from the exchange.
This comes at a time when the ED is cracking down on cryptocurrency exchanges to conduct money laundering probes. The agency has previously conducted searches on one of the directors of Zanmai Labs, the entity which owns the crypto exchange WazirX. It had ordered to freeze bank balances totaling ₹64.67 crore. The ED had also seized assets worth ₹370 crore of cryptocurrency exchange Flipvolt earlier this month. Flipvolt was the domestic entity that crypto lender Vauld operated through to provide service in India.
The ED is conducting money laundering investigations against several NBFCs and their fintech partners for predatory lending practices in violation of the RBI guidelines. In the fund trail investigation, ED found that large amounts of funds were diverted by the fintech companies to purchase crypto assets on exchanges and then launder them abroad. The cryptocurrency exchanges whose assets have so far been frozen have been accused of lacking sufficient due diligence, violating KYC requirements, and being uncooperative.
Crypto exchange CoinSwitch Kuber has more than 15 million users on the platform. The platform was the second crypto startup to become a unicorn in 2021. The startup is backed by various investors such as a16z, Tiger Global, and Sequoia Capital.
Published on
August 26, 2022
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