Amid a string of raids on crypto exchanges operating in India, the Enforcement Directorate (ED) has conducted another round of searches across five premises of homegrown crypto company CoinSwitch Kuber. These searches were also conducted at the residences of its CEO and directors over alleged violations of FEMA (Foreign Exchange Management Act (FEMA) rules, as reported by a global crypto news platform.
CoinSwitch Kuber has neither confirmed the report nor denied it and said it believes in transparency and engages with all stakeholders. “We receive queries from various government agencies. 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," a CoinSwitch spokesperson says.
CoinSwitch Kuber is one of the two crypto unicorns in India, along with CoinDCX.
The raids on CoinSwitch Kuber are a part of a larger crackdown by the premier agency on crypto exchanges indulging in the violations of FEMA rules. A total of 10 crypto companies are under the ED radar for alleged violations of FEMA rules, media reports show. The probe agency is reportedly investigating money laundering charges worth ₹1,000 crore against various companies.
Notably, CoinSwitch Kuber deactivated all modes of payment to buy cryptos in rupees on its platform in April 2022, thereby leaving users with very limited options to buy cryptos.
Earlier this month, the ED conducted raids on Zanmai Labs, including its directors, over the loan app fraud case and froze bank balances to the tune of ₹64.67 crore.
During the ED investigation, the agency said it found that Zanmai Labs has created a web of agreements with Crowdfire Inc. USA, Binance (Cayman Islands) and Zettai Pte Ltd, Singapore, to obscure the ownership of the crypto exchange.
It added that the company was involved in alleged money laundering and facilitating illegal entities to send money out of India, via the purchase and transfer of virtual crypto assets.
However, WazirX has said it is unaware of the purpose of such transactions on its platform, and that the platform, like any other platform, could have been "misused".
"ED appears to be investigating the transactions of certain users and Zanmai Labs has no affiliation with such users and is unaware of the purpose of their transactions. Zanmai Labs is in the position of any other intermediary whose platform may have been misused," said WazirX.
On August 11, 2022, the ED had frozen bank assets worth ₹370 crore of financially-troubled crypto exchange Vauld. The Singapore-based crypto exchange stopped all kinds of withdrawals and deposits in July 2022.
Despite a huge push by the crypto industry, the government has so far shown a clear intent that the country will not legitimise cryptos unless there's a global collective approach towards making them legal.
Finance minister Nirmala Sitharaman, during a talk with International Monetary Fund (IMF) managing director Kristalina Georgieva in April 2022, had said India doesn't recognise cryptocurrencies, which are outside of the central bank. "The central bank is yet to come up with a digital currency, and it was part of my announcement in the budget this year. It will happen sometime in 2022-23, but in the meantime, we have noticed, that we are not sure about the veracity of the data, which talks about the volume."
