24 June 2021
Popular Indian Cryptocurrency Exchange WazirX received a show-cause notice from the Enforcement Directorate (ED) to violate the FEMA (Foreign Exchange Management Act),1999, over cryptocurrency transactions worth Rs. 2,790.74 crore
According to the ED statement, the FEMA investigation is initiated based on the ongoing money-laundering investigation into Illegal Online Chinese Betting Applications. During the investigation, it was seen that the Chinese nationals had laundered Rs 57 Crore approximately by converting the INR deposits into Tether (USDT) and then transferring the same to Binance Wallets based on information received from abroad, the ED statement claimed.
Wazir is registered under Zanmai Labs Pvt Ltd and its directors Nischal Shetty and Hanuman Mhatre. Global cryptocurrency exchange Binance had acquired India's WazirX in 2019. Users can go to WazirX to trade BTC and other cryptocurrencies while spending in Rupees.
Responding to the ED's notice, Nischal Shetty, Founder & CEO of WazirX, said, "WazirX is yet to receive any show-cause notice from the Enforcement Directorate as mentioned in today's media reports. WazirX is in compliance with all applicable laws."
Furthermore, ED claimed that WazirX did not collect the requisite documents in clear violation of the primary mandatory anti-money Laundering (AML) and combating financing of terrorism (CFT) norms and FEMA guidelines.
"In the period under investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth ₹880 crore from Binance accounts and transferred out cryptocurrency worth ₹1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit or investigation," it claimed.
The agency also found that the WazirX Clients could transfer 'valuable' crypto-currencies to any person irrespective of its location and nationality without proper documentation, making it a safe haven for users looking for money laundering/ other illegitimate activities.
Disclaimer: The author’s views and opinions are for informational purposes only and do not constitute financial, investment, or other advice.