CoinSwitch Is Not Under Investigation For Laundering – CEO Claims

CoinSwitch is not under investigation for money laundering, claims its CEO, who doesn’t really reassure users.

Ashish Singhal, CEO of CoinSwitch Kuber, released further information on Saturday regarding the searches conducted two days ago at his workplace and apartment by India’s financial crime investigative agency, the Directorate of Enforcement (ED).

He denied recent reports that his company was being probed for illegal actions.

The CEO Explains

Singhal stated in a Twitter thread that the ED’s searches were not related to money laundering or any other inquiry under the Prevention of Money Laundering Act (PMLA).

“Enforcement Directorate – Bengaluru has been engaged with us with respect to the functioning of our crypto platforms/exchanges. We are fully cooperating with them… Our engagement with the Enforcement Directorate – Bengaluru was NOT related to any money laundering inquiry under PMLA, as reported in some news articles,” he stated on Twitter.

According to the Twitter statement, CoinSwitch is not under investigation for money laundering. But what then are they investigated for?

According to Singhal, the problem derives from a lack of understanding about the status of cryptocurrencies, including whether they are a commodity, security, money, or something else. It is a new asset class that has not yet been classified. The categorization, type, and model of the firm decide whether foreign exchange regulations apply.

“India is not alone. Australia is carrying out a “token mapping” to understand this; in the US, there is an ongoing debate whether some crypto is considered commodities, others securities,” Singhal added in his Twitter thread.

ED Search and The Allegations

On Friday, it was revealed that the ED was looking into CoinSwitch, India’s second unicorn in the crypto field, for possible violations of the Foreign Exchange Maintenance Act (FEMA). The ED conducted searches, on Thursday, at five CoinSwitch-related locations, including the homes of its CEO and directors, as part of the inquiry.

According to a Reuters story on Saturday, ED agents confiscated several financial papers during the search. They enquired about CoinSwitch’s overseas investments, revenue, and outflows to ensure that they were in accordance with all applicable regulations and laws. According to the article, Singhal declined to “specify the ED’s claims, citing legal sensitivity.”

Tightening Investigations

According to reports, the ED is looking at at least 10 cryptocurrency exchanges for possible FEMA and PMLA offenses.  The ED conducted searches at WazirX and Vaud offices and blocked some of their bank accounts, recently.

Overall, law enforcement authorities are increasing their monitoring of cryptocurrency exchanges. In April, numerous such Indian enterprises were forced to suspend INR deposits when the RBI-controlled NPCI, which operates the popular instant inter-bank mobile-based payments and settlements service, refused the immediate payment capability via UPI.

As a result, the government decided to levy a 30% capital gains tax and a 1% TDS on all cryptocurrency transactions commencing in April and July, respectively. This forced bitcoin exchanges to tighten their compliance rules even further.

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