Indian Agency Raids Crypto Exchange CoinSwitch Kuber for FX Law Violations

Indian anti-money laundering agency, Enforcement Directorate (ED), raided the premises of CoinSwitch Kuber, one of the largest local cryptocurrency exchanges, under the suspension of forex law violations.

The agency searched five premises linked to the crypto exchange, including office facilities and residences of directors and the CEO. CoinSwitch allegedly violated the Foreign Exchange Management Act (FEMA) with the acquisition of shares of over 20 billion rupees ($250 million).

According to Bloomberg, the exchange was found to be violating certain know-your-customer (KYC Know Your Customer (KYC) Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks Read this Term) norms.

“We are looking into multiple possible contraventions under FEMA and other entities that are connected to it,” an ED official told the crypto-focused publication, Coindesk. “Since we did not receive the desired cooperation, we have conducted searches on (residences) of directors, the CEO, and the official premises.”

A Crypto Unicorn

The popularity of CoinSwitch exploded after the Indian Supreme Court decided against a banking ban on crypto platforms. The exchange is backed by Tiger Global, Sequoia and Coinbase Ventures, and it became a unicorn startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c Read this Term last year after an Andreessen Horowitz-led funding round.

“We receive queries from various government agencies,” a CoinSwitch spokesperson said in a statement sent to media platforms. “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 latest ED action against a crypto exchange is not the first in India. Earlier this month, the anti-money laundering agency froze $8.2 million worth of assets linked to WazirX, another major Indian crypto exchange, for its connection to illegal instant lending apps and raided one of its directors.

Moreover, WazirX received a notice earlier for alleged forex law violations involving digital currencies worth 27.9 billion rupees ($382 million). Furthermore, the agency took action against Vauld, a troubled Singapore-based crypto lender, and froze nearly $46 million worth of assets.