The central agency took action against the WazirX Director for assisting the accused instant loan app companies in the laundering of fraud money via the purchase and transfer of virtual crypto assets
The Enforcement Directorate on August 5 conducted searches at the premises of one of the directors of Zanmai Labs Private Limited, which owns and operates cryptocurrency exchange platform WazirX. The ED has frozen bank assets worth Rs 64.67 crores.
WazirX is an Indian cryptocurrency exchange that acts as a platform for trading in digital currencies such as Bitcoin, Ethereum, Tron, Ripple and Litecoin.
The central agency took action against the WazirX Director for assisting the accused instant loan app companies in the laundering of fraud money via the purchase and transfer of virtual crypto assets.
A report by the Times of India quoted the Enforcement Directorate as saying: “When police and ED started crackdown, the loan app firms used the cryptocurrency route to take money out of the country. Most of the money is transferred to Hong Kong through crypto assets via WazirX. We found evidence regarding the transfer of money to crypto assets. We have frozen more than Rs 100 crore crypto assets of WazirX.”
The investigating agency is currently conducting money laundering probes against a number of Indian NBFCs and their fintech partners for lending practices that are in violation of guidelines issued by the Reserve Bank of India (RBI) and for using telecallers, who abuse borrowers to extort high interest rates from them.
The Ministry of Finance had informed the Rajya Sabha on August 2 that the ED is investigating two cases against WazirX under the provisions of the Foreign Exchange Management Act, 1999 (FEMA). It had further said that Zanmai Labs was using the walled infrastructure of Binance.
The Finance Ministry had further said: “It has been found that all crypto transactions between these 2 exchanges were not even being recorded on the blockchains and were thus cloaked in mystery. Accordingly, a show cause notice (SCN) has been issued under the provisions of FEMA against WaxirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.”
The ministry added that WazirX has allowed the foreign users’ request to convert one crypto into another by using transfers from third-party exchanges namely FTX, Binance, etc.
Earlier this year, the ED had issued a show-cause notice to cryptocurrency exchange WazirX and its directors Nischal Shetty and Sameer Mhatre on June 11 for allegedly violating guidelines in connection with transactions worth Rs 2,790.74 crore.