The Enforcement Directorate on Thursday raided the offices of cryptocurrency exchange CoinSwitch Kuber for alleged violations of the Foreign Exchange Management Act. A spokesperson for the exchange underplayed the raid, saying, “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.”
The Enforcement Directorate’s Bangalore office, which crypto-focused publication Coindesk reported was behind the raid, was not available when reached by phone. The financial law enforcement agency reportedly chose to raid CoinSwitch locations after not receiving enough cooperation from the company.
Three top executives of the company departed CoinSwitch just last month, Entrackr had exclusively reported. They co-founded PYOR Edge, a web3 analytics firm that seeks to “accelerate global institutional participation in Web3”.
This comes at a time when the Enforcement Directorate has been cracking down on cryptocurrency platforms on suspicions of fraud being conducted on their platforms by bad actors.
Earlier this month, the agency froze Rs 367 crore in accounts held by the exchange Vauld. The ED had then said that the Singapore-based exchange had “very lax KYC norms, no [enhanced due diligence] mechanism, no check on the source of funds of the depositor, no mechanism of raising [suspicious transaction reports], etc [and therefore a Chinese loan app] assisted […] fintech companies in avoiding regular Banking channels, and managed to easily take out all the fraud money in the form of crypto assets.”
A director at Binance-owned exchange WazirX was also subjected to a raid this month.
While the Indian government has not banned cryptocurrencies, law enforcement agencies’ increased scrutiny of the space, along with hefty government taxation, seem geared at making the space unpalatable to cautious investors. The Reserve Bank of India went so far as to say that private cryptocurrencies should be banned in India, but the government determined that more international cooperation would be needed before such a move.