While the cryptocurrency exchanges have not been charged with assisting money laundering, questions have been raised about the very nature of cryptocurrencies.
The Narcotics Control Bureau and the Income Tax Department are both looking into cryptocurrency exchanges.
ED had summoned WazirX last year to explain suspected “illegal” cryptocurrency transactions of over INR 2,800 Cr.
The cryptocurrency exchanges CoinDCX and CoinSwitch Kuber are being asked for further information and documentation by the Indian government’s Directorate of Enforcement (ED), which combats money laundering.
According to ET, ED has written letters to many crypto exchanges as part of its continuing investigation into the suspected cases of foreign currency breaches.
The development continues ED’s probe into incidents of cryptocurrency-related money laundering. It should be highlighted that one of the most common crimes in the cryptocurrency sector is money laundering, with hackers laundering $8.6 billion in bitcoin in 2021.
As a decentralized asset, cryptocurrencies have allowed criminals a quicker and safer way to transmit their “illegal” money without revealing their identities. T Rabi Sankar, the RBI’s deputy governor, noted that cryptocurrencies were being used for commerce in violation of the law in February of this year.
At the time the story was published, CoinDCX has not responded to Inc42’s emails; the piece will be updated when it does.
According to a CoinSwith Kuber spokesman, “We receive inquiries from numerous governmental organizations. Transparency has always been the cornerstone of our strategy. We constantly interact with all players in the cryptocurrency business, which is in its early stages but has a lot of promise.
The Negative Facet Of Crypto
Cryptocurrency exchanges haven’t been charged with aiding in money laundering, but their sheer existence has drawn attention. As a result, several organizations, including the Narcotics Control Bureau and the Income Tax department, are looking into cryptocurrency enterprises.
The Narcotics Control Bureau discovered in April 2022 that bitcoin worth INR 2.2 Cr had been utilized in 11 incidents involving narcotics trafficking.
According to a recent Chainalysis research, terrorist groups including Al-Qaeda, the Islamic State, Hamas, and Merciful Hands among others sought to use cryptocurrencies to fund their operations in 2021.
Similar to this, ED summoned WazirX last year to explain cryptocurrency transactions of over INR 2,800 Cr that were allegedly against FEMA regulations.
The investigating agency said that Chinese nationals converted INR deposits into Tether cryptocurrency and then transferred it to their Binance wallets to launder “proceeds of crime” totaling INR 57 Cr. WazirX had answered at the time that it hadn’t gotten a show-cause notice from the investigating agency.
ED is apparently looking at information on offshore transfers as part of its continuing inquiry into the nature of cryptocurrency transactions. Payments to or receipts from anybody outside of India are prohibited under the FEMA, along with foreign currency transactions and the sale of foreign securities.
