For the first time in India’s digital asset sector, the Enforcement Directorate (ED), the nation’s law enforcement and economic intelligence agency, has appointed a digital asset exchange to handle custodian services for seized ‘cryptocurrency.’
The ED has entrusted CoinDCX with the responsibility of managing asset forfeiture and providing a secure custody infrastructure for storing and supervising these assets. This partnership is expected to ensure a compliant and secure solution for handling seized assets, CoinDCX said in an emailed statement.
In July 2024, CoinDCX, India’s first digital currency unicorn, listed the BSV token for trading on its platform, allowing users to have more ways to buy, sell, and trade BSV. With CoinDCX’s roughly 15 million registered users, the listing marks a significant expansion into the Indian market for BSV and demonstrates its potential and possibility in the region.
“Deeply honoured to share that CoinDCX is assisting the Enforcement Directorate (ED) for custody management of seized assets,” said Sumit Gupta, Co-founder of CoinDCX.
“CoinDCX will deploy a specialised team trained in advanced security protocols and will assist the ED to store seized assets in multi-signature and multi-party computation (MPC) wallets. Multi-signature wallets require multiple keys for withdrawals, while MPC wallets distribute a private key into multiple shards across devices,” Gupta explained.
“Based on our 7+ years of operations in India, we will provide the best-in-class security, compliance solutions, and unparalleled expertise in digital asset management! This is our small attempt at contributing to nation-building and creating a safer ecosystem for digital assets,” Gupta added.
The ED has been taking strong measures to address and dismantle digital asset fraud across multiple cities in India. With the increasing rise of financial crimes in the digital asset sector, the agency has significantly ramped up its operations to investigate and target fraudulent activities. These efforts are part of a broader strategy to ensure that digital asset markets remain secure and that illegal schemes that exploit unsuspecting investors are swiftly identified and stopped. Through these crackdowns, the ED aims to uphold financial integrity and safeguard public interest in the country’s rapidly evolving digital economy.
The ‘crypto’ seizures
In one of India’s most significant digital asset seizures, the ED froze assets worth Rs 1,646 crore last month as part of an investigation into the massive $2.4 billion BitConnect scam. The primary suspect, Satish Kumbhani, was charged in the United States in 2022. Court records reveal that Satish Kumbhani (36) from Hemal, India, and the founder of BitConnect, deceived investors with the company’s “Lending Program.”
Kumbhani, along with his accomplices, promoted BitConnect’s claimed proprietary technology, including the “BitConnect Trading Bot” and “Volatility Software,” as tools capable of generating significant profits and guaranteed returns by using investor funds to trade on digital currency market fluctuations. However, the indictment alleges that BitConnect was operating as a Ponzi scheme, using money from newer investors to pay returns to earlier ones.
In a parallel development, the ED also conducted raids in Delhi, Jaipur, and Mumbai as part of an investigation into a digital asset fraud case. The case involved Chirag Tomar, a 31-year-old Indian sentenced to five years in the U.S. According to reports, a U.S. district judge in Charlotte, North Carolina, handed down the sentence in October 2024. Tomar was convicted of stealing over $20 million from numerous victims by creating counterfeit websites impersonating legitimate cryptocurrency exchange Coinbase (NASDAQ: COIN).
Following his sentencing in the U.S., the ED initiated an investigation under the Foreign Exchange Management Act (FEMA). It estimated that cryptocurrency valued at ₹600 ($6.88) crore was converted through various local crypto exchanges and later transferred by the accused.
India indifferent to digital assets
India’s relationship with digital assets has gone hot and cold over the last few years. The federal government has treated digital assets with suspicion, so far as imposing one of the harshest taxation in 2022—a 30% flat tax on all digital currency income with no provision to offset losses and a 1% tax deducted at source (TDS) on all transactions above Rs 10,000 ($114). This may likely lead to a loss of about $1.2 trillion in trade volume on domestic exchanges over the years, a study from Esya Centre, an Indian policy think tank, claimed. As much as $3.85 billion may have already moved to overseas digital asset trading exchanges as traders look to evade punishing taxes in India.
As a result, India’s digital asset exchanges are likely looking at a consolidation in 2025, with smaller exchanges either shutting down operations or merging with larger ones. Seychelles-headquartered OKX, the second-largest global digital asset exchange by trading volume, shut down its India operations in 2024, citing regulatory hurdles.
While the world’s most populous nation is looking to regulate the digital assets space, Finance Minister Nirmala Sitharaman said last year that ‘cryptocurrencies’ cannot be a legal currency in India. Moreover, in December, India informed that there is no fixed timeline for introducing comprehensive regulatory guidelines for virtual digital assets (VDAs) in the country. As a result, the legal status of VDAs continues to be in limbo, with no specific legislation governing digital currency-based businesses in the country.
Watch: What’s going on with blockchain technology in India?
title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>
