CoinDCX Partners with ED to Secure Seized Crypto
In a significant move, CoinDCX has announced its partnership with India’s Enforcement Directorate (ED) to manage the custody of cryptocurrency assets seized during investigations into illegal operations. This collaboration comes as the ED intensifies its crackdown on crypto fraud across the nation, having recently seized assets worth crores. CoinDCX, a Mumbai-based centralized exchange, will deploy a specialized team to ensure the secure storage of these assets, utilizing advanced security protocols.
Strengthening Security Measures
CoinDCX’s commitment to security is evident in its approach to managing seized crypto assets. The exchange will utilize multi-signature and multi-party computation (MPC) wallets for storage. Multi-signature wallets require multiple keys for any withdrawal, while MPC wallets divide a private key into several shards distributed across different devices. This dual-layered security significantly reduces the risk of hacking by eliminating single points of failure. Sumit Gupta, Co-founder of CoinDCX, emphasized the importance of this responsibility, stating, “We provide best-in-class security, compliance solutions, and unparalleled expertise in digital asset management.”
The partnership was facilitated quickly, with CoinDCX working closely with the ED to establish a custodian account on an urgent basis. Parneet Kumar, Assistant Director at the ED, acknowledged this collaboration, highlighting the importance of secure storage for the assets seized during ongoing investigations.
Recent Crackdowns on Crypto Fraud
This partnership follows a series of extensive search operations conducted by the ED in major cities like Delhi, Jaipur, and Mumbai. These operations are part of a broader investigation into a large-scale crypto fraud scheme that allegedly converted assets worth approximately Rs. 600 crore. The agency recently seized Rs. 2.18 crore from Chirag Tomar, who is believed to be the mastermind behind this scam. This move is part of the ED’s ongoing efforts to combat financial crimes in the rapidly evolving cryptocurrency landscape.
Earlier this year, the ED made headlines by seizing its largest-ever cryptocurrency haul, valued at Rs. 1,646 crore, during a major money laundering investigation linked to a fraudulent investment scheme. The agency has not disclosed the exact amount of cryptocurrency that will be managed by CoinDCX or the specific cases these funds are associated with, leaving many in the industry eager for further details.
Previous Collaborations and Future Implications
CoinDCX’s partnership with the ED marks a notable shift in how seized crypto assets are managed in India. Previously, the ED utilized wallets managed by other exchanges, such as ZebPay and WazirX, for storing seized funds. This new collaboration with CoinDCX reflects the growing need for secure and compliant management of digital assets in the face of increasing regulatory scrutiny.
In a related context, Binance also collaborated with the ED in September 2024 to address the Fiewin gaming scam, which had reportedly defrauded users of $47.6 million (approximately Rs. 400 crore). Binance’s Financial Intelligence Unit played a crucial role in tracing the funds and exposing the fraud network, showcasing the importance of cooperation between cryptocurrency exchanges and regulatory bodies.
As the landscape of cryptocurrency regulation continues to evolve, partnerships like the one between CoinDCX and the ED may set a precedent for future collaborations aimed at enhancing security and compliance in the digital asset space.
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