Home Technology coinswitch kuber: ED searches all five Coinswitch Kuber sites in money laundering investigation

coinswitch kuber: ED searches all five Coinswitch Kuber sites in money laundering investigation

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coinswitch kuber: ED searches all five Coinswitch Kuber sites in money laundering investigation
The Execution Directorate (ED) carried out searches on Thursday at five locations linked to Coinswitch Kuber as part of its investigation into money laundering in the moment micro loan application scam, sources with knowledge of the development told ET.

This is the third exchange under the federal agency’s scanner for allegedly diverting proceeds of crime raised by 365
instant loan apps by offering loans at exorbitant interest rates and then using tele-callers to collect them.

The crypto trading platform, backed by Silicon Valley-based Andreessen Horowitz, and Sequoia Capital India, has over 18 million registered users. According to its website, more than Rs 1 lakh crore worth of crypto has been traded on its platform.

The company neither confirmed nor denied the searches at the emergency department. “We receive requests from various government agencies. Our approach has always been one of transparency. Crypto is an early-stage industry with great potential and we are continuously engaging with all stakeholders,” a company spokesperson said in a statement.

ET reported on August 11 that
ED probes at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime from the accused companies under investigation in the instant loan app case, most of them with links to China .

Similar action is expected against other exchanges as part of the investigation.

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“We receive requests from various government agencies. Our approach has always been one of transparency. Crypto is an early-stage industry with great potential and we are continuously engaging with all stakeholders,” a company spokesperson said in a statement.

ED’s actions add to growing woes for crypto platforms which saw their volumes drop after the introduction of the new tax regime and the Internet and Mobile Association of India (IAMAI) dismantled the Blockchain and Crypto Assets Council (BACC) last month amid growing dispute between the central bank and crypto exchanges over the legal status of virtual currency in India.

Earlier this month, the
ED had seized assets totaling Rs 370 crores including crypto balances in the Flipvolt cryptocurrency exchange. Crypto lender Vauld served Indian residents through its domestic entity Flipvolt Technologies. Previously, the ED had also researched one of the directors of Zanmai Labs, which owns popular crypto exchange WazirX, and issued an order to freeze bank balances totaling Rs 64.67 crore.

Sources say the ED is looking at dodgy peer-to-peer (P2P) transactions, bloated liquidity shown in key documents and lax know-your-customer (KYC) protocols of these exchanges, the sources added.

“The probe found their (KYC) to be either fake or questionable in over 80% of cases,” the person quoted above said. “The agency found that they violated section 11(A) of the PMLA, which requires each reporting entity to verify the identity of its customers and the beneficial owner.”

In Vauld’s case, a fictional entity called Yellow Tune Technologies Pvt. Ltd was used to launder the proceeds of crime using his wallets, the person said. “This company (Yellow Tune) has Chinese nationals as directors who left the country in December 2020, and the promoters are on the run,” the officer said.

In nearly every case that has ties to China, ED investigators have found the same modus operandi: local entities are incorporated by chartered accountants by filing fabricated documents and registering them while the company does not does not exist. These companies are then transferred to Chinese partners.

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