ED raids 5 premises linked to CoinSwitch Kuber; crypto exchange responds

New Delhi: Continuing its money laundering probe into the instant micro loan app scam, the Enforcement Directorate (ED) on Thursday searched five locations linked to cryptocurrency platform CoinSwitch Kuber, sources told Economic Times.

Silicon Valley-based Andreessen Horowitz and Sequoia Capital India-backed CoinSwitch Kuber is the third exchange which is facing ED lens for the alleged diversion of proceeds of crime raised by 365 instant loan apps by offering loans at exorbitant rates of interest.

The exchange did not confirm or deny ED searches and said, “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 company spokesperson said in a statement.

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ED lens on crypto exchanges

Earlier this month, it was reported that the ED is investigating at least ten cryptocurrency exchanges for allegedly laundering over Rs 1,000 crore identified as proceeds of crime of the accused firms in the instant loan app case. Many of these platforms have a China connection.

In another case of crackdown on crypto exchanges, the agency had seized assets worth Rs 370 crores including the crypto balances in the Flipvolt cryptocurrency exchange. Crypto lender Vauld serviced Indian residents through its domestic entity Flipvolt Technologies.

Prior to this, the ED had also conducted searches on one of the directors of Zanmai Labs, which owns the crypto exchange WazirX, and issued an order to freeze bank balances totalling Rs 64.67 crore. However, WazirX has clarified that it was compliant with the KYC law and has a no-tolerance policy towards any illegal activities.

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ED freezes WazirX director’s bank accounts worth Rs 64.70 crore following raids

Sources indicated that the agency is scanning for questionable peer-to-peer (P2P) transactions, inflated liquidity shown in key documents and lax know-your-customer (KYC) protocols of these exchanges. “The probe has found their (KYC) to be either bogus or dubious in more than 80 per cent of the cases,” a person cited above said.

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