Afghan authorities shut down 16 crypto exchanges and arrested staff

The new Afghan government opposes cryptocurrencies, claiming that crypto companies are defrauding their customers.

The country’s authorities closed about 16 cryptocurrency exchanges in the country’s western province of Herat. The move comes three months after Afghanistan banned the trading of cryptocurrencies.

The names of the closed crypto-exchanges were not disclosed, however, the local head of the police department for combating crime, Sayed Shah Sa’adat, said that the central bank banned any trading in crypto assets, as this practice created problems and fraud. According to the security official, all people involved in the local crypto business were arrested and their trading floors were closed.

After the return of the Taliban to power, the financial situation of the country’s citizens worsened as billions of dollars of foreign aid ceased and US sanctions froze the government’s foreign assets. All this has increased the interest of local residents in cryptocurrencies, although sanctions have made it difficult to purchase digital assets.

In June, the Taliban-led central bank of Afghanistan banned online foreign exchange trading. The representative of the Central Bank said that the regulator considers trading in the Forex market illegal and fraudulent, and there are no instructions in Islamic law to approve it.

According to Chainalysis, in 2021 Afghanistan entered in the top 20 countries of the Global Cryptocurrency Adoption Index, which displays the prevalence of digital assets around the world.

In early 2022, Farhan Hotik, a crypto investor and journalist from the Afghan province of Zabud, reported that against the backdrop of US sanctions, local residents are increasingly providing themselves with everything they need to live or to emigrate from the country using digital assets.