Bitcoins flip across borders, pay for drugs

NCB: Quality narcotics found in Delhi, Mumbai, B’luru, Goa in raids

Published: 16th September 2020 06:04 AM  |   Last Updated: 16th September 2020 06:04 AM   |  A+A-

Express News Service

BENGALURU: Payments have been made to overseas drug dealers through cryptocurrency on the dark web in some instances, the Narcotics Control Bureau (NCB) has unearthed during its initial investigation into the cross-country anti-drug bust raids. In cross-country operations in Delhi, Mumbai, Goa and Bengaluru, the anti-drug raids conducted under the Narcotic Drugs & Psychotropic Substances (NDPS) Act have not only exposed the inter-connection between the demand and supply chains of high quality drugs in the four places, it has also exposed the use of dark web and cryptocurrency for making payments for contraband. “Payment for the contraband, reportedly smuggled from the USA and Canada to India, have been made through cryptocurrency on the Darknet,” said NCB sources.

The shift in payment mode for illicit drugs from the usual hawala route to the dark web has foxed financial investigation and Intelligence agencies because cryptocurrency is a new phenomenon and is largely anonymous.

“It is a dangerous trend because  cryptocurrency can be bought from a hawala operator and can be used for making payments for the contraband. It will be very difficult for the law enforcement agencies to find out the origin of cryptocurrency in such a case,” said Neeraj Aarora, Supreme Court advocate, arbitrator and domain expert on cyber laws and forensics.

Nischal Shetty, founder of WazirX – a bitcoin exchange— said that while there is a need for “positive regulation so that the cryptocurrency ecosystem is clean, the best way to regulate cryptocurrency would be to regulate crypto exchanges around the world.” Shetty said that they, under the Internet and Mobile Association of India, are “working on a code of conduct for cryptocurrency companies in India, which lays out a guideline for Know Your Customer/Anti Money Laundering (KYC/ AML) and other regulatory-related features. This will help curb illegal activities as well as scams.

This way, exchanges can also help the law enforcement agencies as well as educate masses,” said Shetty. He added that some developed countries such as the US, UK and Japan were tackling crypto in a similar way. Cryptocurrencies are digital assets, which run on a decentralised public ledger called blockchain, which is a record of all transactions updated and held by currency holders. Unlike fiat (government backed) money, cryptocurrency does not exist in physical form and is not issued by a central authority. In 2018, the Reserve Bank of India banned crypto transactions after a slew of frauds. The cryptocurrency exchanges subsequently filed a lawsuit in the Supreme Court, which in March this year, had overruled the RBI’s ban.


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