By Mark Ackman
Five premises that were connected to renowned crypto exchange Coinswitch Kuber were searched by the Enforcement Directorate (ED) in India.
According to the company, the searchers did not have anything to do with money laundering activities. The federal agency had also recently frozen assets of two other crypto platforms, namely Vauld and Wazirx.
The situation
The Indian government’s law enforcement and economic intelligence agency are referred to as the Enforcement Directorate (ED).
On Thursday, it conducted searches of five locations that were linked to Coinswitch Kuber, a popular platform for crypto trading.
A number of global venture capitalists, including Coinbase Ventures, Tiger Global, Sequoia Capital, and Andreessen Horowitz (A16gz) have backed the crypto trading platform in question.
According to Coinswitch, it has about 18 million registered users in India, which makes it the largest crypto app in the country.
It is also one of the largest crypto exchanges in India and was able to earn the status of a unicorn in the previous year.
On Saturday, the chief executive of Coinswitch Kuber, Ashish Singhal explained the situation on Twitter. He stated that the ED Bangalore had not searched its premises due to money laundering or PMLA.
The latter stands for Prevention of Money Laundering Act. He stated that ED Bengaluru had engaged with the company regarding the functioning of their crypto exchanges/platforms.
The CEO also said that they were cooperating with the federal agency.
Constructive dialogue
He asserted that their platform was one of the most compliant ones in the country and being an industry leader, they were engaging in constructive dialogues with different stakeholders.
He said that their goal was to help them in understanding their business models, along with their compliance practices, in order to provide more clarity on such issues.
Reports indicated that other than the facilities of the company, the ED also did a search of residences of the directors of the crypto exchange based in Bengaluru.
According to a source familiar with the matter, the platform is being investigated for violating the forex laws of the country by acquiring shares of about 20 billion rupees.
Other reports
However, there were conflicting reports about the reason of the search, as some said that money laundering was the reason.
A source close to the investigation supposedly said that the ED believes Coinswitch Kuber violated the PMLA Act, under which every entity needs to verify its clients’ identity.
The investigation discovered that the exchange’s KYC was either dubious or bogus, in almost 80% of the cases.
It had also been reported recently that the Enforcement Directorate (ED) was investigating at least 10 crypto exchanges for money laundering activities of about 1,000 crore rupees.
These were proceeds of criminal activities that had been conducted through 365 instant loan apps. Earlier this month, a director of the owner of crypto exchange Wazirx, had also been investigated.
Zanmail Labs’ director had been the subject of the investigation and the ED had then frozen bank assets of the crypto exchange valued at $8 million.
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