Mumbai: The Enforcement Directorate (ED) is facing a unique challenge to liquidate 300 crypto coins worth, approx Rs 93 crore, seized as part of crackdown on E-Nugget, an app which masqueraded as a gaming platform and cheated users on the pretext of high returns.
The scam was unearthed in 2022 and the probe agency found that 2,500 mule accounts were being used to convert proceeds of crime into bitcoins for money laundering. Last month, the ED took possession of crypto assets held in 70 accounts maintained with major crypto exchanges like Binance, ZebPay and WazirX. It also seized assets, including cash, account balances and office space, worth Rs163 crore.
However, the federal anti-money laundering agency now finds itself in a catch-22 situation as it can't liquidate cryptocurrency without the mandatory Permanent Account Number (PAN).
As per law, PAN is required for such transactions which are eligible for 'Tax Collection at Source'. Also, the document is needed to acquire nil 'Tax Deduction at Source' (TDS) certificate from the Income Tax (I-T) department.
“It is tough to navigate the complex regulatory and tax compliances to liquidate the digital assets seized by law enforcement agencies,” said a senior tax official. Approval for exceptions from the ministry of finance and I-T department is needed to acquire a nil TDS certificate and sell crypto without PAN, the official explained.
The cyber attack at WazirX by Korean hackers, which resulted in the loss of nearly Rs2,000 crore worth of cryptocurrencies, has added to the ED's woes. The Exchange has asked depositors to take a huge 45% haircut of the crypto value for “socializing the losses” by spreading the financial impact of the hack across all of its users.
