ED Partners With CoinDCX For Custody Management Of Seized Assets

India’s Enforcement Directorate (ED) has collaborated with CoinDCX, one of the largest crypto exchanges in India, to manage the custody of seized assets. This initiative aims to address the growing occurrence of cryptocurrency-related crimes. 

The Mumbai-based crypto exchange is registered with the Financial Intelligence Unit (FIU). As a part of this collaboration, CoinDCX will set up a specialized team trained in advanced security protocols. The exchange has stated that, “As part of this collaboration, the firm will provide a secure custody infrastructure to store and manage confiscated assets.” 

Further, the exchange will store all the seized assets in the multi-signature and multi-party computation (MPC) wallets. The multi-signature wallets will require multiple keys for the withdrawals, while multi-party computation wallets will require a private key for different shares across the devices. Both of these methods will boost the security by knocking out the single points of failure, by making hacking truly more difficult.

Sumit Gupta, the co-founder of CoinDCX, has announced this partnership on his X post, stating, “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!”

Many crypto enthusiasts have taken this step positively and have shown their excitement by commenting positively on the post. Stating that it’s a great step for the Indian crypto community. 

Additionally, Parneet Kumar, Assistant Director at the ED, Government of India, said that, “CoinDCX has been cooperative and assisted in the seizure process, providing valuable support in the investigation led by the Enforcement Directorate (ED). The company has worked closely with the directorate, ensuring compliance with all legal requirements and facilitating the opening of the custodian account on an urgent basis.”

The ED’s partnership with CoinDCX follows a recent series of search operations across Delhi, Jaipur, and Mumbai, investigating a large-scale crypto fraud that involved the conversion of assets worth ₹600 crore. As part of the search operation, the agency has seized ₹2.18 crore from the mastermind, Chirag Tomar.

In mid-February, the ED also seized the largest-ever illegal cryptocurrency gains worth ₹1,646 crore during a “mega” money laundering research into a fraudulent investment scheme. Authorities have also expanded enforcement, ensuring the large-scale cryptocurrency fraud cases and scams.

However, this collaboration took place due to increasing scams like GainBitcoin and BitConnect scams. In the GainBitcoin scam, the agency seized cryptocurrencies worth ₹23.94 crore (about $2.88m), along with documents and electronic devices that are currently being analyzed for evidence of financial misappropriation and cross-border transactions.

Similarly, in the BitConnect scam operation, the ED seized digital assets worth ₹1,646 crore (about $198m) last month. The scam cheated the investors worldwide. As a result, authorities have carried out a search operation across multiple locations across Gujarat. In this operation, the authorities have seized ₹13.50 lakh (around $16,250) in cash, an SUV, and several digital devices.

With cryptocurrency adoption growing in India, regulatory bodies are stepping up towards the enforcement measures to protect investors and to reduce the illegal financial activities by adopting advanced solutions to it.