Indian crypto exchange giant CoinSwitch Kuber comes off as the next trading platform to be raided by the Enforcement Directorate (ED).
Local media outlets reported on Thursday, citing one employee from the Bangalore Cell of the ED, that at least 5 premises linked to the trading platform were raided.
According to the anonymous tip, the raid was conducted in relation to the Foreign Exchange Management Act (FEMA).
“We are looking into multiple possible contraventions under FEMA and other entities that are connected to it,” the official said. “Since we did not receive the desired cooperation, we have conducted searches on (residences) of directors, the CEO, and the official premises” of the trading platform.
The raid on digital currency trading platforms in India is no longer a piece of big news as the precedent was set earlier this month with Binance-linked trading firm, WazirX. While the freezing of over $8 million belonging to WazirX was in connection with its alleged role in facilitating money laundering activities for Chinese loan apps.
Scrutiny on digital currency trading platforms is now a major trend, considering the need for regulators to ascertain that digital currency trading platforms follow established money laundering guidelines. The exact charges on CoinSwitch Kuber are yet to be determined, and there is no certainty on whether there is a connection between the enforcement action taken against the trading platform and WazirX.
Unlike the investigation into WazirX, which caused the authorities to raid the house of one of the directors of the exchange, the source did not also confirm if the raid into CoinSwitch Kuber involved any personal director of the crypto marketplace.
Likewise, Bithumb, a South Korean exchange, is one of the trading firms that was raided consistently by the police back in 2020. The incessant crackdown on the platform forced it to offer itself up for sale, with Huobi one of the early firms, hinted to have interest in acquiring the platform at the time.
Indian cryptocurrency exchanges CoinSwitch Kuber and WazirX have banned users from making Rupee deposits to buy cryptocurrencies, Reuters reported.
This is a decision that stems from regulatory uncertainty. Last week the National Payments Corporation of India, the operator of the government-backed United Payments Interface (UPI), said it was unaware of crypto exchanges using its UPI which is a widely-used state-backed transfer network used for simplifying transfers between banks.
CoinSwitch Kuber enjoys 15 million users, and currently allows users to withdraw corresponding rupee funds but does not support depositing rupees on its platform.
While platform users have urged the exchange to let its users know how long it will be closed, rival exchange WazirX said it did not estimate a time limit for resolving the issue.
India’s parliament announced that it passed the Finance Bill 2022, which has introduced taxation on digital assets including cryptocurrencies, effective on April 1
According to Abhishek Malhotra, Founding Partner of TMT Law Practice
“Regulatory clarity is the need of the hour. There are currently a lot of conflicting signals on the regulatory regime, leading to lack of certainty.”
Coinbase, the largest crypto exchange in the U.S., announced Thursday that its trading services are now available to users in India. The publicly listed firm said that it is working to widen its product offerings in the country.
Indian crypto exchange Coinswitch Kuber has raised more than $260 million in its latest funding round, with contributions from Andreessen Horowitz (a16z) and Coinbase Ventures.
Coinswitch Kuber Secures Funding
While crypto regulation in India seems uncertain, big investors see potential.
Coinswitch Kuber, a Bangalore-based crypto exchange, has become India’s largest crypto unicorn, securing over $260 million in its latest Series C funding round. The exchange announced the conclusion of its raise Wednesday.
A $1.9 billion crypto dream! We’re officially India’s LARGEST CRYPTO UNICORN!
Excited to announce our Series C funding of $260+mn led by @a16z & @Coinbase, along with Tiger Global @RibbitCapital @paradigm & @Sequoia_India 🙏
CoinSwitch, making Crypto happen! 💫#KuchTohBadlega pic.twitter.com/peJxxjzWN9
— CoinSwitch Kuber (@CoinSwitchKuber) October 6, 2021
Among the investors are the American venture capital firm Andreessen Horowitz, Coinbase Ventures, and several smaller existing investors, including Paradigm, Ribbit Capital, and Tiger Global.
The raise values Coinswitch Kuber at $1.9 billion, placing it above the $1.1 billion valuation of competing Indian crypto exchange CoinDCX. The exchange stated that it will use the funds to help onboard users and launch new products on the exchange, with the aim of growing its user base from 10 to 50 million.
Launched in June last year, Coinswitch Kuber is exclusive to India and aims to simplify crypto trading. The mobile app currently supports over 100 different cryptocurrencies and allows users to invest as little as 100 Indian rupees, about $1.30.
Andreessen Horowitz has quickly become one of the leading venture capital firms in the crypto space. However, the participation in Coinswitch’s Series C marks the firm’s first investment in India.
In June, Andreessen Horowitz launched a $2.2 billion crypto fund, the largest in the industry to date. The venture capital has so far invested hundreds of millions into the crypto space, with notable investments from the firm including the hit play-to-earn game Axie Infinity, the NFT exchange OpenSea, and the blockchain gaming platform Dapper Labs.
Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.
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