Homegrown crypto investing app CoinSwitch Kuber’s co-founder Ashish Singhal, on Saturday, stated that his company’s engagement with the Enforcement Directorate (ED) was not related to any money laundering enquiry under the Prevention of Money Laundering Act (PMLA).
Singhal, speaking for the first time publicly about Thursday's ED raids, made this comment via a Twitter post following reports that the ED searched the CoinSwitch Kuber’s offices for alleged Foreign Exchange Management Act (FEMA) violations.
Earlier, Coindesk, quoting an ED official, reported that five premises tied to the CoinSwitch Kuber were searched, including the residences of directors, the CEO, and the official properties.
Two officials belonging to the Bengaluru cell of the ED, on the day of the raids, stated that the national financial-crime agency is searching the official premises linked to the CoinSwitch Kuber and the residences of the company's directors and its CEO.
An official also said, “We are looking into multiple possible contraventions under FEMA and other entities that are connected to it.” He further added, “Since we did not receive the desired cooperation, we have conducted searches on (residences) of directors, the CEO and the official premises of the exchange.”
CoinSwitch, which is valued at $1.9 billion, claims that it is India’s largest crypto company with more than 18 million registered users. Andreessen Horowitz, Tiger Global and Coinbase Ventures are investors in the firm.
Singhal also stated that the law enforcement agency “has been engaged with us with respect to functioning of our crypto platforms/exchanges. We are fully cooperating with them.”
"Most of their engagement with us has been about knowing what CoinSwitch does," Singhal tweeted, saying the inquiries included operations of crypto exchanges, how users were onboarded and details about know-your-customer norms.
CoinSwitch's CEO, in a series of tweets, said that “Crypto is a new asset class. Being in the early stages, cryptos are not yet clearly classified in most parts of the world. Now, the law (in India and elsewhere) is still assessing if crypto is a “commodity”, “security”, “currency” or something new. The classification is still a work in progress. The classification of crypto and the nature of business models matter, as this decides how and what the laws that govern foreign exchange are, and if at all applicable.”
“India is not alone here. Australia is carrying out a “token mapping” to understand this; in the US, there is an ongoing debate whether some crypto are considered commodities, others securities,” he added”
ED’s this investigation into CoinSwitch comes amid tightening regulatory scrutiny of the crypto sector in the country.