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BitConnect Founder Under Investigation by Indian Police Following Indictment in the US

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BitConnect founder seems to be in trouble. Indian authorities are currently looking into Satish Kumbhani, the creator of the bitcoin investment website BitConnect, for the multi-million dollar fraud.

According to reports, Kondhwa Budruk, a lawyer from Pune, reported the incident to the cybercrime police on August 16.

As per the initial information report (FIR), the lawyer allegedly lost close to 220 bitcoins, which are roughly worth $5.14 million on the open market. Kumbhani (36) and six other people have been named by the attorney. According to the report, no arrests have reportedly been made thus far.

Fugitive BitConnect Founder Kumbhani Indicted in US Website
BitConnect Founder Under Investigation by Indian Police Following Indictment in the US 2

BitConnect founder was earlier charged with Ponzi scheme allegations

The BitConnect founder was charged by a federal jury in San Diego earlier in February on charges of running a Ponzi scheme. According to this, the founder was discovered to have stolen up to $2.4 billion from later investors by using their money to pay off early investors.

The FIR claims that the complainant in this instance was defrauded of both his initial investment of 54 bitcoins and the returns of 166 bitcoins, which he was reportedly compelled to reinvest in the sites between 2016 and June 2021. Kumbhani and his friends reportedly defrauded investors in a virtual currency scheme, according to senior police inspector DS Hake.

The report was released a few days after Nirmala Sitharaman, India’s finance minister, expressed new worries about investing in virtual assets. “The government has issued an alert. Sitharaman cautioned the general public and startup business owners, “I think all of us will have to express our ideas and act with a little caution on this.

Her remarks also follow an ongoing investigation in which the Indian Enforcement Directorate (ED) froze the bank account of one of the directors of Zanmai Lab Private Ltd, the company that runs the Indian cryptocurrency exchange WazirX, and blocked bank assets worth approximately $46 million that belonged to the troubled crypto exchange Vauld.

Cryptocurrency balance freeze of Vauld: Indian saga

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The cryptocurrency accounts of Bengaluru-based Yellow Tune Technologies, a provider of financial services, have been blocked, according to a Friday announcement from India’s Directorate of Enforcement (ED). Flipvolt, the Indian division of Singapore’s Vauld, held some of the accounts. The action is related to an ongoing investigation into money laundering by instant loan companies with ties to China. The organisation has intervened in the cryptosphere in relation to that matter twice this week.

After determining that Yellow Tune was a shell company formed by two Chinese nationals using aliases, the financial watchdog declared it was freezing the company’s bank balances, payment gateway balances, and balances in the Flipvolt cryptocurrency exchange for a total of 3.7 billion rupees, or $46.4 million. Newspaper reports claim that the ED spent three days searching locations connected to Yellow Tunes.

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Source: Press Release

The ED discovered 23 entities that had put money into Yellow Tune’s Flipvolt wallets before sending it elsewhere. The ED gave Flipvolt harsh criticism for how company handled the money. The agency further stated,

“Lax KYC [Know Your Customer] norms, loose regulatory control of allowing transfers to foreign wallets without asking any reason/declaration/KYC, non-recording of transactions on Blockchains to save costs etc, has ensured that Flipvolt is not able to give any account for the missing crypto assets. It has made no sincere efforts to trace these crypto assets.”

Cryptocurrency exchanges suspected by ED

The Enforcement Directorate (ED) of India is investigating cryptocurrency exchanges that may have handled transfers from companies under investigation to foreign wallets totaling more than 10 billion rupees, or nearly $130 million. ten cryptocurrency exchanges, at least, are apparently implicated.

However, local publications stated that WazirX, a cryptocurrency exchange, had its bank account suspended.

In a case involving rapid loans, it is claimed that organisations under investigation conducted transactions of up to 1 billion rupees ($1.3 million), or $1.3 million, in the names of individuals who had no relation to the money. These companies frequently had ties to China. Even though anti-money laundering and know your customer procedures indicated that the transactions were suspicious, neither enhanced due diligence nor suspicious transaction notifications were submitted to the ED.

Furthermore, WazirX bank accounts containing 647 million rupees ($8.1 million) were frozen by the ED. claiming that roughly 16 fintech companies under investigation for money laundering received assistance from the exchange.

Indian Crypto Exchange WazirX Issued Notice For “Mysterious Transactions”

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Indian crypto platform WazirX has been served a show cause notice [SCN] for allowing outward remittance of crypto assets to the tune of 2790 crore to unknown wallets, the Ministry of Finance told the Upper House on August 2. 

The exchange is currently under the scanner of the nation’s law enforcement agency- The Directorate of Enforcement [ED] which is investigating two cases against the former under the provisions of the Foreign Exchange Management Act, 1999 [FEMA],

The first case is about Zanmai Labs, which operates WazirX, for using the walled infrastructure of Binance. Secondly, the agency accused the platform of allowing foreign users to convert one crypto into another by using transfers from third-party exchanges namely FTX, Binance, etc.

Further, it has been found that all crypto transactions between these 2 exchanges were not even being recorded on the blockchains and were thus cloaked in mystery. Accordingly, a show cause notice (SCN) has been issued under the provisions of FEMA against WaxirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.

Last month ED also sent out notices to a number of exchanges including WazirX to seek details about customer transactions.

WazirX Was Fined $5 Million For Alleged Tax Evasion

Last year, the Goods and Services Tax [GST] Department started probing into the activities of cryptocurrency exchange WazirX for allegedly evading Rs 40.5 crore in tax. The authorities said it recovered Rs 49.2 crore from the firm – the GST owed plus interest and penalties.

The indirect tax department revealed that WazirX issued its own cryptocurrency- WRX coins through Zanmai Labs without paying GST on it.

At that time, a spokesperson denied the allegations saying that they have been paying GST every month and there seems to be ambiguity around the tax framework.

As reported by TronWeekly, Indian Finance minister Nirmala Sitharaman stated in Parliament that a decision of banning or regulating crypto assets will only take place after proper consultation with global stakeholders weighing on the risks and benefits.

In a written response, Sitharaman said this is to prevent ‘prevent regulatory arbitrage.’

The latest development comes at a time when the Indian crypto industry is struggling with new taxation rules and a massive drop in its daily trading volumes.

India’s FM-“Crypto Regulation Or Ban Only After Global Support”

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Indian Finance minister Nirmala Sitharaman stated in Parliament that crypto regulation or banning is effective only after proper consultation with global stakeholders weighing on the risks and benefits.

In a response to a query in the lower house, Sitharaman wrote that the Reserve Bank of India [RBI] has recommended to the government that it should bring cryptocurrencies under the regulatory ambit and prohibit them.

“In view of the concerns expressed by the RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI believes that cryptocurrencies should be prohibited,” the finance minister replied in the Lok Sabha.

Sitharaman then proceeded to add the necessity of international collaboration to prevent any kind of exploitation of regulatory loopholes, given that cryptocurrencies are not bound by any border.

Crypto proponents in India were eagerly waiting for the bill to be presented during the Monsoon Session of Parliament that began today. However, no such bill has been listed for introduction as of now.

That said, the Indian govt’s continuous ambiguity has left industry top players frustrated.

India’s Crypto Bodies Divided Over Govt’s Stance

Differences have cropped up in India’s two main crypto groups over the government’s stance toward crypto. After the Internet and Mobile Association of India [IAMAI] dissolved The Blockchain and Crypto Assets Council or BACC recently.

The industry players are now planning on creating a new body.

Members of BACC felt that IAMAI was reluctant to push their cause, in terms of compliance with government regulations.

“We feel that IAMAI is trying to distance themselves from crypto as they feel the government is not in favor of private digital currencies,” a BACC member said.

Apart from that only the top 4-5 crypto firms contributed the major funds to BACC, which proved costly at times of low trading volumes due to the draconian tax structure.

“It was a costly association and there wasn’t any ROI for an industry which is under severe cost pressure,” said a crypto exchange CEO requesting anonymity.

On the other hand, IAMAI in a statement said it has decided to disband BACC since its advocacy does not align with IAMAI’s long-term objectives. IAMAI added it would continue to support the Indian government’s CBDC initiatives.

Indian Crypto Exchanges’ Daily Trading Volume Drops By 60%-87%

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Indian crypto exchanges have recorded a massive drop in their daily trading volumes since the 1% tax-deductible at source became effective on July 1, as per Coingecko. Trading platforms in the receiving ends are ZebPay, WazirX, CoinDCX, and Giottus.

Since transaction fees are a major income source for crypto exchanges, the fall in trading volume only adds to the woes of these firms.

The TDS rule states that all trades involving the sale and transfer of digital assets will be charged a 1 percent fee on the seller’s end. This means that the seller will receive 1 percent lesser than the total proceeds of the sale.

Indian crypto proponents have been vocal against the new provisions and warned that it will severely jeopardize crypto trading in India, especially with the current market slump.

Sumit Gupta, co-founder and CEO at CoinDCX, numerous times stated that this tax “would do more harm than good.”

However, a few experts believe it is too early to determine the full effect of the new TDS rules “At present, it is still premature to predict the ramifications of TDS. We will be in a better position to understand this by the second week of July,” said Rajagopal Menon, vice president at WazirX.

Indian Exec: “Long-Term Crypto Investors Are Still Holding The Ground”

While long-term crypto holders are still buying and selling, market makers and high-frequency traders are “gone,” Menon added. Traders are also doing more peer-to-peer trading and migrating to so-called decentralized exchanges, he said.

On the other hand, some analysts view the TDS rule from a positive angle. Shivam Thakral, CEO of crypto exchange BuyUcoin stated,

“Investors can trade now with confidence by paying applicable taxes and crypto entrepreneurs in India can conduct their business without any fear.”

Earlier in February, the Indian government introduced a tax regime for digital assets, that included the TDS and a flat 30% tax on income from crypto investments.

The crypto industry has been currently engulfed in a market downturned that began at the end of December 2021. As a result, several Indian crypto exchanges have slowed down their hiring initiatives to cut down operating costs.

India Might Add 28% To Its Existing Crypto Tax

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People with knowledge of the situation indicated that an Indian cabinet panel will meet next week to talk about imposing a goods and services tax on cryptocurrency transactions.

The council, made up of the finance ministers of the federal government and the states, is looking to expand the tax net in order to more effectively track transactions involving virtual digital assets, according to the people, who declined to be named due to restrictions on speaking with the media. Beginning on June 28, the panel will convene for two days in Chandigarh, in northern India.

The individuals added that although conversations may be done about including it in the highest tax bracket of 28 percent, the panel is unlikely to decide on a rate in the forthcoming meeting.

India thinks a hefty 30% tax is not enough

In an effort to gauge the extent of the local cryptocurrency market and keep track of users, India’s Finance Minister Nirmala Sitharaman levied a 30 percent tax on revenue from the transfer of virtual assets and a 1 percent source tax on all cryptocurrency transactions earlier this year. The action was perceived as resolving doubt over the legality of cryptocurrency transactions.

Due to the ambiguity around whether digital currencies should be treated as products or services and the absence of a legal framework, there is still uncertainty over the implementation of a sales tax on them.

We previously reported that the federal government is already working on legislation to either regulate or strengthen regulations. However, it is envisaged that this would only happen until a worldwide agreement on the regulation of such assets emerges.

As global central banks have started to raise interest rates to rein in growing inflation, digital currencies and other risky assets have been under attack all year. This year, Bitcoin has decreased by almost 50%, while Ether has decreased by 70%

Turkish Cryptocurrency Exchange Bitay Marks Its Entry Into The Indian Market

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Bitay a Turkish Cryptocurrency Exchange is set to enter the Indian market to tap the rapid usage of Cryptocurrency in the country.
According to Bitay, it is going to comply with India’s proposed Cryptocurrency tax guidelines. The exchange with its wide range of customer base of approximately 1 million worldwide has also set up an office in Gurgaon, India.
As per sources, the exchange plans to reach out to the population between the ages of 21 and 35 in cities such as Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, and Bangalore, Indore, Patna, Lucknow, and Jaipur.
Speaking on the new development, Niyazi Yilmaz, the CEO of the exchange, stated,

“The company embraces and welcomes the decision of the Govt of India of laying a 30 percent tax on Cryptocurrency profits and 1 percent TDS beginning in July”.


Yilmaz added that through their initiatives, they are going to attract Indian merchants and investors. Early users shall also receive an Airdrop after they have completed their KYC on the exchange platform.
In addition to this, Yilmaz also pointed out its goal to reach out to the millennial generation, which constitutes 30 percent of the population and generates 38 percent of the total gross income.

Bitay says “Namaste India!”


A few days back, the firm tweeted on its official handle “Namaste India. Our localization starts with India.”
Besides India, the trading platform also plans to expand into other nations such as England, the United States, the Netherlands, and Estonia. It claims to have licenses in 12 states in the US.
Not limited to cryptocurrency and trading activities, Bitay has also extended its operations into other initiatives and products namely Game, Bitay Academy, Bitay NFT Platform, and Bitay Visa Card.
This Cryptocurrency exchange based in Istanbul Turkey further claims to keep customer assets in cold storage such as hardware wallets rather than paper wallets and PCs without internet access.

India’s Two Crypto Experts Busted for Looting Crypto

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Two crypto experts of India were apprehended by the Pune Police’s Cyber Crime Cell, who allegedly drained wallets that were supposedly under investigation by the police.

According to local media sources, Pankaj Ghode and Ravindranath Patil, two alleged cyber-crime professionals, may have siphoned off substantial sums of cryptocurrency from a Bitcoin Ponzi scam that took place in 2018.

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India's Two Crypto Experts Busted for Looting Crypto 5

India’s crypto experts stole from the loot

Since last year, the two specialists, one of whom was a former Indian Police Service officer, have reportedly been supporting the Pune police’s Special Inquiry Team (SIT) in the investigation.

According to the report, the crew seized 241.46 bitcoins, 452 bitcoin cash, and 94 Ethereum. However, they are now suspected of moving millions of dollars in cryptocurrency from the accused’s wallets to personal accounts. According to the study, 237 bitcoins from the funds have been traced so far.

As part of their investigation into an alleged 900 bitcoin difference, the police have reportedly recovered approximately $770,000 in 34 different cryptocurrencies. The former officials, meanwhile, will be tried for a variety of violations and are currently in judicial custody. In addition, the alleged crypto specialists have been charged with a 4,400-page charge sheet.

India and its stance on crypto

The Securities and Exchange Board of India (SEBI) recently provided an update on the condition of crypto regulation in India to the Parliamentary Standing Committee on Finance.

“Because crypto assets are kept in decentralized distributed ledgers, which are nested in computer nodes all over the world,” the agency wrote, “there is a high risk of illicit exchanges not in accordance with any regulatory framework.”

In the past, SEBI has advised celebrities to avoid advocating crypto assets in order to protect investors.

The watchdog emphasized more controls this time, saying, “A digital currency operates as a bridge between the fiat currency of the foreign jurisdiction and the Indian rupee.”

“One goal of bringing crypto trading platforms under regulatory scrutiny could be to offer AML/CFT/KYC reporting; this can be accomplished by registering the companies as money changers, authorized dealers, or FX dealers,” according to the research.

Meanwhile, the central bank is waiting for the government to disclose its crypto consultation paper, which it has been critical of since its inception.

India’s Ultra-Rich Investors Find A New Way For Crypto Betting

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Indian policymakers’ heavy-handedness towards crypto has left the sector high and dry. Trading has almost come to a halt and several industry bigwigs are flocking to friendlier nations while others chose to stay back hoping for some change in the government’s policy.

Ironically things don’t look good in the near short term. But that has not deterred some from looking out for alternative routes to place their crypto bets. And these are not just any ordinary investors. In fact, this cohort belongs to India’s most affluent kind.

According to a local source, these high net-worth investors are employing the Overseas Direct Investment [ODI] route to bet on cryptocurrencies abroad. The ODI offers liberalized remittance facility [LRS] – the customary window for offshore investments.

These wealthy individuals utilized the services of a non-banking finance local entity to sponsor an overseas investment company located for instance Dubai.

The funds used to capitalize on this foreign arm are invested in securities and assets abroad, including cryptos sold on trading platforms outside India.

Why India’s Top Investors are banking on ODI?

Under pressure from the nation’s top regulator, large private and foreign banks have been asking investors remitting funds under LRS to provide an undertaking that the money would not be used to purchase digital assets.

This is why ODI has emerged as a preferred option for larger investors. The foreign subsidiary can receive investment up to four times the net worth of the local NBFC. Also the former is governed by the laws of the country it’s based on [and not Indian regulations].

An expert specializing in foreign exchange regulations further added, “The central bank may never get to know about it from the annual information which the RBI receives. RBI typically doesn’t ask for their balance sheets.”

Thanks to the stiff taxes, and a clampdown on crypto trading in India, many are figuring out ways to hold cryptos overseas as many believe that the Indian government would not be able to collect TDS on trades cut on foreign exchanges.

Nevertheless, It is apparent that many crypto enthusiasts are desperate to find ways to invest in these asset classes without facing regulatory wrath.

RBI Says That India’s CBDC Will Go Hand in Hand With the Monetary Policies

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The debut of India’s Digital Rupee CBDC, which is slated to take place in the current fiscal year 2022-23, is highly anticipated by the investors of the country.

According to a report produced by the Reserve Bank of India (RBI), the CBDC will be in line with the country’s current monetary policies and payment systems.

The Reserve Bank of India (RBI), which will have responsibility for the Digital Rupee, intends to use a graded approach in line with the country’s financial system.

A Central Bank Digital Currency (CBDC) is a central bank-regulated blockchain-based payment mechanism. While it functions similarly to a traditional cryptocurrency in that it allows for quick, high-value digital payments, CBDC transactions are traceable and overseen by the government.

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RBI Says That India’s CBDC Will Go Hand in Hand With the Monetary Policies 7

Will India’s CBDC improve the government’s stance on crypto?

“The Reserve Bank proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept, pilots and the launch. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems.”

RBI highlighted in the report

The news comes after a top RBI official was quoted as saying that the CBDC would be implemented separately for the wholesale and retail sectors.

The country’s finance minister, Nirmala Sitharaman, has stated on multiple occasions that the Digital Rupee will expand payment choices for Indians.

The Indian government is also counting on the CBDC to expand its efforts to bring financial inclusion to people who have yet to access the country’s banking networks. The creation and roll-out of the Digital Rupee are underway, and the Indian government does not want to expedite the process.

RBI Governor T Rabi Sankar remarked in April that the launch of India’s first digital currency would require a sophisticated and calibrated approach because it would have multiple consequences for the economy and monetary policy.

Several other countries, including the United States, Russia, China, Jamaica, Nigeria, and Mexico, are working on their own CBDCs.