ED Raids Crypto Exchange Coinswitch Kuber for FEMA Violations

ED Raids Crypto Exchange Coinswitch Kuber for FEMA Violations

The Enforcement Directorate India has conducted searches at five premises linked to the popular cryptocurrency trading platform Coinswitch Kuber. The company has clarified that the ED search was not related to any money laundering case. The ED recently froze the assets of two other crypto firms, Wazirx and Vauld.

Coinswitch Kuber on the ED Scanner

The Enforcement Directorate (ED), the law enforcement and economic intelligence agency of the Government of India carried out searches at five locations linked to the popular crypto trading platform Coinswitch Kuber on Thursday.

The cryptocurrency trading platform is backed by several global venture capitalists, including Andreessen Horowitz (A16z), Tiger Global, Coinbase Ventures, and Sequoia Capital. Coinswitch claims to be India’s largest crypto app, with over 18 million registered users. The platform is one of India’s largest cryptocurrency exchanges, having achieved unicorn status last year.

On Saturday, Coinswitch Kuber CEO Ashish Singhal took to Twitter to explain the situation. He said that the engagement with the ED Bangalore is "not about money laundering or PMLA (Prevention of Money Laundering Act)." He clarified: "The Enforcement Directorate – Bengaluru has been engaged with us concerning the functioning of our crypto platforms and exchanges. We are fully cooperating with them. "

"As an industry leader in India and one of the most compliant crypto platforms, we have been engaged in constructive dialogues with various stakeholders to help them understand our business models and best compliance practices, thereby bringing more clarity on such matters," the CEO tweeted.

Bloomberg reports that the ED searched the offices and residences of Directors and the CEO of the Bengaluru-based crypto exchange. Citing reliable sources, the publication added that the trading platform is under the scanner for acquiring shares worth over INR 20 billion (USD 250 million) in violation of the FEMA guidelines.

The Economic Times (ET) reported that the searches were related to money laundering. "The agency has found them to violate section 11 (A) of the PMLA Act, which requires every reporting entity to verify the identity of its clients and the beneficial owner," the publication described. Sources privy to the investigation added, "The probe has found their KYC (Know Your Customer) to be either bogus or dubious in more than 80% of the cases."

The news publication recently reported that the ED is probing at least ten cryptocurrency exchanges across the country for allegedly laundering more than INR 1,000 crore identified as proceeds of crime raised by 365 instant loan apps.

The ED investigated one of the directors of Zanmai Labs, which owns cryptocurrency exchange Wazirx, earlier this month. The agency subsequently issued an order freezing more than USD 8 million in bank assets of the crypto exchange. A week later, the ED froze more than USD 46 million in crypto and bank assets of Peter Thiel-backed crypto trading and lending platform Vauld.