ReutersMumbai: The Enforcement Directorate (ED) has issued a show cause notice to WazirX, and directors Nischal Shetty and Sameer Mhatre under FEMA for transactions involving cryptocurrencies worth Rs 2790.74 crore, according to a statement on Friday.
According to the federal agency, an investigation under the Foreign Exchange Management Act, 1999, was initiated on the basis of the ongoing money-laundering probe into Chinese-owned illegal online betting applications, sources said.
“During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 crore approximately by converting INR deposits into cryptocurrency tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) wallets based on instructions received from abroad.”
When contacted for comment of the development, WazirrX director Shetty said, "WazirX is yet to receive any show cause notice from Enforcement Directorate, as mentioned in today's media reports."
"WazirX is in compliance with all applicable laws. We go beyond our legal obligations by following know your customer (KYC) and anti-money laundering (AML) processes and have always provided information to law enforcement authorities whenever required," he said. "We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation."
According to the ED statement, WazirX allows a wide range of crypto transactions, including:
The probe has revealed that in the period under investigation, users of WazirX via its pool account received incoming cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts.
“None of these transactions are available on the blockchain for any audit/investigation. It was found that the WazirX clients could transfer 'valuable' cryptocurrencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering/other illegitimate activities,” the federal agency stated.
WazirX was acquired by Cayman Island-based crypto exchange Binance in 2019. Binance wasn't immediately available for comment on the matter.
ET's Apoorva Mittal contributed to this story.
According to the federal agency, an investigation under the Foreign Exchange Management Act, 1999, was initiated on the basis of the ongoing money-laundering probe into Chinese-owned illegal online betting applications, sources said.
“During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 crore approximately by converting INR deposits into cryptocurrency tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) wallets based on instructions received from abroad.”
ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transaction… https://t.co/dcU8XlOugB
— ED (@dir_ed) 1623397497000When contacted for comment of the development, WazirrX director Shetty said, "WazirX is yet to receive any show cause notice from Enforcement Directorate, as mentioned in today's media reports."
"WazirX is in compliance with all applicable laws. We go beyond our legal obligations by following know your customer (KYC) and anti-money laundering (AML) processes and have always provided information to law enforcement authorities whenever required," he said. "We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation."
According to the ED statement, WazirX allows a wide range of crypto transactions, including:
- Exchange of Crypto with INR and vice-versa
- Exchange of cryptocurrencies
- Person to Person (P2P) crypto transactions
The probe has revealed that in the period under investigation, users of WazirX via its pool account received incoming cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts.
“None of these transactions are available on the blockchain for any audit/investigation. It was found that the WazirX clients could transfer 'valuable' cryptocurrencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering/other illegitimate activities,” the federal agency stated.
WazirX was acquired by Cayman Island-based crypto exchange Binance in 2019. Binance wasn't immediately available for comment on the matter.
ET's Apoorva Mittal contributed to this story.