Aditya Kalra’s
New Delhi: The top cryptocurrency app in India, CoinSwitch, is working with India’s national financial crime agency. This week, officials from the agency visited CoinSwitch’s offices to learn more about its business strategy and how it adds new users, the CEO of the service told Reuters on Saturday.
With more than 18 million registered users, CoinSwitch, which is valued at $1.9 billion, claims to be the largest crypto startup in India. Among its investors are Andreessen Horowitz, Tiger Global, and Coinbase Ventures (NASDAQ: COIN).
Ashish Singhal talked about Thursday’s search for the first time in public. He said that his business was working with the Indian Enforcement Directorate’s IT Center Bengaluru section on how to run its cryptocurrency platform.
“Most of what they’ve done with us has been to find out what CoinSwitch does,” Singhal said, adding that the questions were about how a crypto exchange works, how customers are added, and how to make sure you know who you’re dealing with.
According to a source with first-hand information, the issue involves alleged breaches of India’s foreign currency rules. According to the source, agents asked about investments, income, and money coming in and going out of the country to check for compliance and seized financial documents.
Singhal refused to elaborate on the agency’s accusations, citing legal sensitivity.
The Enforcement Directorate did not reply to a request for comment immediately.
The probe into CoinSwitch coincides with increased regulatory scrutiny of India’s cryptocurrency industry.
In a separate case this month, the agency froze $8 million in assets belonging to WazirX, a leading virtual currency exchange, as part of an investigation into whether it helped instant loan app companies launder money from illegal activities by letting them convert it to cryptocurrencies on its platform.
WazirX contests the accusations.
The agency stated that it was investigating multiple shadow banks and associated fintech businesses for suspected breaches of central bank regulations and aggressive lending practises in relation to money laundering.
Singhal stated that the CoinSwitch investigation was not about money laundering. “The agency has been in touch with us about how our cryptocurrency platform works, and we are doing everything they ask of us,” he said.
While no official data is available on the extent of India’s crypto sector, CoinSwitch believes that up to 20 million people have around $6 billion worth of cryptocurrencies.
