ED attaches ₹936 cr as proceeds in cryptocurrency fraud

Minister of state for finance Pankaj Chaudhary, in a written reply to a question in the lower house of Parliament, on Monday, said the Enforcement Directorate is investigating several cases related to cryptocurrency frauds wherein a few crypto exchanges have also been found involved in money laundering, as per PTI report.

Chaudhary revealed that as of January 31, 2023, proceeds of crime amounting to ₹936 crore have been attached/seized/freezed, 5 persons have been arrested and 6 prosecution complaints (PCs) including 1 supplementary PC have been filed before the Special Court, PMLA in these cases.

Notably, under the Foreign Exchange Management Act, 1999 (FEMA), ED seized assets of approximately ₹289.28 crore, and one show cause notice to cryptocurrency exchange Zanmai Labs, popularly known as WazirX, and its directors has been issued for transactions involving cryptocurrencies aggregating to ₹2,790 crore.

The minister also replied regarding any plans of the government for regulating virtual digital assets in the near future.

According to the ministry, regulating virtual assets or banning them can be effective only with significant international collaboration on the evaluation of the risks and benefits and the evolution of common taxonomy and standards.

Recently, Economic Affairs Secretary Ajay Seth in an interview said that the government is working with Financial Stability Board (FSB) to at least build a policy for crypto assets along with a regulatory framework. The same is expected to be agreed upon during India’s G-20 presidency itself.

Last week, the UK government announced to set out ambitious plans to robustly regulate crypto asset activities – providing confidence and clarity to consumers and businesses alike. Under the plans, it will seek to regulate a broad suite of crypto asset activities, consistent with its approach to traditional finance, as per the UK government website.

The need for regulating cryptocurrencies came into the spotlight as the market faced a massive blow since last year with illiquidity, the collapse of renowned stablecoins, and the bankruptcies of several crypto exchanges.