Tamil Nadu DGP Unveils ‘Handbook for Investigations into Virtual Digital Assets’: All Details

Tamil Nadu's Director General of Police, Shankar Jiwal, has introduced a comprehensive guide to aid police officials in investigating crypto-related crimes. Titled 'Handbook for Investigations into Virtual Digital Assets', the guide provides access to specialised tools and techniques designed to combat crypto-related offenses effectively. This initiative comes at a time when the global Web3 sector faces increasing cyber threats and concerns over criminal exploitation. In response to these risks, India's law enforcement agencies are stepping up efforts to equip their teams with the technical expertise needed to navigate the evolving landscape of Web3.

Tech-focused law firm Hash Legal collaborated with the Giottus crypto exchange to compile this handbook, which offers industry insights into crypto-related crimes such as money laundering, Ponzi schemes, and cyber fraud.

In a press release, DGP Shankar Jiwal emphasised the importance of utilising it to enhance the police force's ability to handle crypto-related cases effectively.

Giottus CEO Vikram Subburaj, commenting on the launch, pointed out the persistent knowledge gap surrounding Web3 in India. He stressed that law enforcement agencies must seize every opportunity for hands-on training and education to combat crypto crimes efficiently.

“We found that many officers were hesitant to handle crypto cases, and they often grappled with fundamental questions like ‘Is crypto legal in India?' or ‘Can crypto-related crimes be solved?' This is what led us to put together a structured guide that demystifies investigations in this space,” Subburaj said.

The handbook provides a comprehensive overview of legal policies and frameworks relevant to the virtual digital assets sector. It also includes practical training on tracking transactions across exchanges and wallets, along with detailed guidance on handling cases involving international entities.

Bengaluru-based Hash Legal contributed to the report by outlining key legal provisions, equipping law enforcement officers with a clear understanding of India's current crypto regulations.

“We have taken great care to cover all legal provisions and elaborate on various scenarios, so that Agencies can understand the nature of crypto offenses and are equipped with the tools necessary to investigate them. It is also vital that victims of crypto crimes be met with the same empathy and compassion,” said Athif Ahmed, Partner at Hash Legal. “We hope the outcome of this Handbook will be to ensure a balanced approach that both upholds the law and supports those who have been wronged.”

The handbook is set to be distributed among police officials across the country. Training sessions are set to be held after the distribution. Police officials will be trained on tracking, tracing, and prosecuting crypto-related offenses.

India is yet to finalise its crypto laws. Presently, firms dealing with digital assets in India need to comply with the Prevention of Money Laundering Act), 2002. In addition, companies need to secure a mandatory registration with the Financial Intelligence Unit to legitimise their operations in the country.

With a lack of clear rules, Indian crypto space has witnessed several criminal activities. In 2023, the Minister of State for Finance, Pankaj Chaudhary informed the Lok Sabha that the Enforcement Directorate was overwhelmed with crypto fraud cases. As of January 31, 2023, proceeds from crime amounting to Rs. 936.89 were attached/seized/frozen by law enforcement agencies. In February, the ED seized cryptocurrency worth Rs. 1,646 crore as part of a "mega" money laundering investigation.

Despite ED's efforts to curb crypto crime, WazirX was hacked last year and over $230 million (roughly Rs. 1,900 crore) was stolen. This further highlighted the need for more legal control over the space.

In 2022, IIT Kanpur stated that it was developing a tool to analyse the authenticity of crypto transactions to help UP police check and identify fraudulent crypto transactions.