Bitcoin businesses are facing huge challenge in India now. After a guideline issued by the Reserve Bank of India a couple of days ago regarding Bitcoin’s use in the country, the Enforcement Directorate (ED) raided an entity that provides a platform to trade Bitcoin. The advisory told the public not to indulge in buying-selling of Bitcoins has forced Bitcoin companies to shut their shops.
In its first raid, the Enforcement Directorate in Ahmedabad shut Mahim Gupta’s buysellbit.co.in. Gupta’s office, located in Bopal area of the city provides a trading platform and during the preliminary investigation, the ED found that it is in clear violation of the Foreign Exchange Management Act (FEMA) rules of the country.
Bitcoin Transactions are a Violation of FEMA Laws
The Enforcement Directorate believes that Mahim Gupta is violating the FEMA law which restricts a person or organization from indulging in such transactions. According to the statement from the top Enforcement Directorate officer, “We have found that through the website 400 persons have recorded 1,000 transactions that amount to a few crores of rupees.”
He also said that the ED is gathering the data of the transactions, names of the people who have transacted in the virtual currency from Gupta’s server that is hired in the U.S. The government agency believes that Mahim Gupta’s company is a violation of foreign exchange regulations of the country, and if it is able to establish money laundering violations, then he can be arrested.
The Premises Have Been Sealed
When the Enforcement Directorate team reached to the premises of the company that Mahim Gupta is running they could not found him; however, they sealed the premises. Also, according to the sources from the government body the value of transactions is not known as each transaction will be verified by the investigating agency.
Despite the fact the Enforcement Directorate team has not been able to determine the value of exact transactions, one officer from the government agency says that it is likely to be around Rs20-30 crores. He says that the trouble is that being a virtual currency its transfer and settlement is done online.
The government agency believes that no country has legalized Bitcoin as of now because of its opaque nature and there is huge risk and the biggest threat is that money can be transferred like hawala, which has been a major method for money laundering in India.
To contact the reporter of this story: Deepak Tiwari at Deepak@forexminute.com