Bengaluru30 minutes ago
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The Enforcement Directorate raided 3 Bengaluru-based locations of crypto trading platforms Coin DCX and Delta Exchange on November 4 and 5.
The investigation has found evidence of international crypto transactions without legal permission and large-scale violations of FEMA i.e. Foreign Exchange Management Act.
FEMA A law that regulates foreign exchange transactions, cross-border transfers and foreign investment in the country. Its objective is to safeguard India’s foreign exchange reserves and make international trade and payments easy and transparent.
Accusation of conducting derivatives trading without approval
This entire controversy is related to illegal ‘derivative trading’ on foreign platforms and sending thousands of crores of rupees out of the country without government approval.
In normal trading, any person becomes its owner by purchasing a share or crypto coin. But in derivatives trading, you do not buy anything directly, but only bet on whether its price will increase or decrease in the future.
It is alleged that both these Indian platforms were openly promoting such trading to their customers on foreign crypto websites without any approval.
In this entire game, stablecoin named ‘USDT’ was being used to send money out of the country. Usually, when a person or company sends money abroad through a bank, there is strict monitoring by the Reserve Bank. To avoid this legal process and the attention of the banking system, these platforms used USDT as a medium.
USDT actually works like a digital dollar, whose value always remains constant at one dollar. It can be transferred through Blockchain to any corner of the world in the blink of an eye without any banking restrictions.
Investigation has revealed that Coin DCX was sending hundreds of crores of rupees to big foreign crypto platforms like Binance, KuCoin and Bybit through USDT under the pretext of its business expenses and transaction fees.
At the same time, Delta Exchange was routing a large part of customers’ deals through Coin DCX and was also transferring the money to its foreign partner companies.
According to ED, in this way thousands of crores of rupees were sent abroad digitally from India without banking records and without paying tax, which is a violation of the Foreign Exchange Act.
Platforms like Coin DCX facilitate SIP in crypto and derivative trading in shares of US companies in addition to crypto coins.
Violation of SEBI and RBI rules also
Investigations by investigative agencies have revealed that these platforms have not only violated FEMA but have also broken many major rules related to stock market and banking.
The fintech products of these crypto companies have been found to be against the standards set by SEBI Act 1992, Securities Contracts Act 1956 and RBI Act 1934.
Crypto investors’ money may get stuck
This legal entanglement can have a direct impact on common investors. If the investigating agencies take strict action against these platforms, their bank accounts or crypto wallets are frozen, then the money of common users trading there may get stuck for a long time and the risk of their drowning may also increase.
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