CoinSwitch Kuber Investigation by India’s Enforcement Directorate
India’s law enforcement authorities take violations of cryptocurrency exchange regulations very severely.
Enforcement Directorate officers have conducted a raid on one of the largest cryptocurrency exchanges in India. Due to a money laundering investigation, 365 instant loan applications were subject to the search.
According to the official report, five CoinSwitch Kuber-affiliated offices have been forcefully searched in connection with the investigation.
The study also noted many potential FEMA or Foreign Exchange Management Act breaches. This legislation governs all entering and departing Indian commerce.
It is thought that the current raid was part of the Directorate’s investigations into many other firms. WazirX, another prominent cryptocurrency exchange in India, was also searched earlier this month.
The authorities raided five sites associated with WazirX and froze all of their assets. To the penny, $8,13,000,000. The directorate accused WazirX of money laundering based on their ties to atypical fast loan applications.
The Enforcement Directorate analyzed Coinswitch Kuber’s account-to-account transactions and other facts.
The research uncovered crucial papers linked to CoinSwitch Kuber’s overstated liquidity and very loose know-your-customer (KYC) processes. According to a report from the Economic Times, the investigation revealed that its KYC standards are “false or questionable in 80% of the instances.”
These searches are part of an ongoing investigation against eleven cryptocurrency exchanges suspected of money laundering. Despite not generating an STR or suspicious transaction report, however, the exchanges assert that they comply with current KYC regulations.
The policies of the 365 under investigation for rapid lending apps sparked the agency’s curiosity about these applications. They often demand very high-interest rates and frequently do so using so-called “telecallers.”
In light of this, the agency also revealed its purported method of operation. Once the loan app realizes that they are under surveillance, they utilize the exchanges to shift the funds abroad.
They transfer it by purchasing cryptocurrency on these exchanges and transferring it to another account. The majority of these allegedly money-laundering accounts are often situated in mainland China.