The federal agency issued a notice in the WazirX matter under the Foreign Exchange Management Act (FEMA) following an ongoing money-laundering probe into Chinese-owned illegal online betting applications.
In line with its prevailing focus on crypto exchanges and funds laundering, ED issued a show-cause notice to WazirX and its directors Nischal Shetty and Sameer Hanuman Mhatre for allegedly violating foreign exchange laws involving crypto transactions of Rs 2,790 crore.
The agency has found non-compliance with forex rules and how users use the crypto platform to launder money. Comparable action is expected on more crypto platforms and their officials this month, told a senior administrator in the agency.
In the WazirX affair, the federal agency assigned a notice under the Foreign Exchange Management Act (FEMA) following a continuous money-laundering probe into Chinese-owned illegal online betting bills.
Some Chinese citizens have laundered Rs 57 crore by turning rupees into cryptocurrency Tether (USDT) and then shifting the money to Cayman Islands-registered Binance wallets based on instructions obtained from abroad, according to the ED.
Nevertheless, the exchange said it was yet to receive any report from the ED. WazirX complies with all laws. They go beyond their legal obligations by following Know Your Customer and anti-money laundering processes and have always provided information to law enforcement authorities whenever required. It tweeted after the ED statement.
They can trace all users on their platform with official identity information. Should they receive a formal communication or notice from the ED, they’ll fully cooperate in the investigation. People funds are safe on WazirX. The exchange added it.
WazirX allegedly allowed a comprehensive range of transactions in cryptocurrencies, including trading cryptos for rupees and the other way round. Apart from these, there are person-to-person events and even transfers/receipts of cryptocurrencies held in its pool records to wallets of other exchanges, which foreigners in spots outside India could control.
The exchange got cryptocurrencies worth Rs 880 crore via its pool account from Binance accounts. In extension, it has transferred cryptocurrencies worth Rs 1,400 crore to Binance accounts throughout the period under investigation.
The agency said the exchange not collecting requisite documents violated anti-money laundering laws and FEMA guidelines.
The ED said none of these activities was open on the blockchain for any audit/investigation. It was discovered that WazirX clients could transfer “valuable” cryptocurrencies to any person, irrespective of location and nationality and without proper documentation, and promote those users looking to launder money.
WazirX is an India-based cryptocurrency exchange that allows its customers to trade in digital currencies such as Bitcoin, Ethereum, and Ripple.
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