Lok Sabha Question No. 5127 (UNSTARRED), answered on 2023-04-03
Subject: Crypto Related Frauds
Ministry: FINANCE
Asked by: Chinta Anuradha

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO.5127 TO BE ANSWERED ON 03.04.2023

## Crypto Related Frauds

## 5127. SHRIMATI CHINTA ANURADHA:

Will the Minister of FINANCE be pleased to state:

(a) whether the crypto related frauds have increased in last few years and if so, the details thereof including the number of such frauds reported with the Government during each of the last five years;

(b) the steps taken by the Government to prevent such frauds;

(c) whether all crypto exchanges operating in the country are in compliance with international financial regulations; and

(d) if so, the details thereof and if not, the reasons therefor?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (d): Crypto assets are currently unregulated in India. Frauds relating to crypto are dealt with under extant laws against fraud and cyber crime. The Ministry of Home Affairs has a portal at http://cybercrime.gov.in where frauds involving crypto assets  can be reported to the  Cyber  &  Information  Security  Division.  Further,  'Police'  and  'Public  Order'  are  State subject  as  per  the  Seventh  Schedule  of  the  constitution  of  India.  States/UTs  are  primarily responsible  for  the  prevention,  detection,  investigation  and  prosecution  of  such  crimes including financial frauds through their law Enforcement Agencies.  The 'Citizen  Financial Cyber  Reporting  and  Management  System'  has  been  launched  for  immediate  reporting  of financial frauds and to stop siphoning of funds by the fraudsters. A toll-free Helpline number '1930' has been operationalized to get assistance in lodging online cyber complaints.

The Enforcement Directorate is investigating several cases under the provisions of Prevention of  Money  Laundering  Act,  2002  (PMLA)  and  Foreign  Exchange  Management  Act,  1999 (FEMA), related to  crypto  assets.  As  on  date,  proceeds  of  crime  amounting  to  Rs.  953.70 crores have been attached/seized/freezed, 05 persons have been arrested and 06 Prosecution Complaints (PCs) including 01 supplementary PC have been filed before the Special Court, PMLA in these cases.

Further, under Foreign Exchange Management Act, 1999 (FEMA)  assets amounting to Rs. 289.28 crores have been seized under section 37A of FEMA and 01 Show Cause Notice to crypto  asset  exchange  Zanmai  Labs  Private  Limited  known  as  WazirX  and  its  Directors under  FEMA  for  transactions  involving  crupto  assets  worth  Rs.  2790.74  crores  have  also been issued.

Government  vide  Finance  Act,  2022,  has  brought  a  comprehensive  taxation  regime  for transfer of virtual digital assets (VDAs) and vide notification dated 7 th  March, 2023 has also brought VDAs under the preview of the Prevention and Money-laundering Act, 2002. Crypto Assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.

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