Famous Indian crypto exchange WazirX, which Binance Acquisition in 2019, is under investigation for alleged violation of the Foreign Exchange Act (FEMA) of India. The investigation was publicly announced by India’s Enforcement Directorate (ED) in an official tweet today:
ED has issued a show-cause notice to WazirX crypto-currency exchange for violation of FEMA, 1999 for transactions involving crypto-currencies of Rs. 2790.74 crores.
— ed (@dir_ed) June 11, 2021
In the Indian numbering system, one crore means 10 million. The cryptocurrency transactions under investigation are worth Rs 2,790 crore, approximately $389 million. according to a report good The ED has named the four-year-old exchange and its directors Nischal Shetty and Hanuman Mhatre in a show-cause notice from The Times of India.
Law enforcement agents reportedly discovered suspicious transactions during a money-laundering investigation into illegal online betting applications involving Chinese nationals. The Times cites the ED’s explanation, which claims that the accused persons laundered money received from criminal activities to the tune of about Rs 57 crore ($7.8 million) by converting their rupee deposits into Tether.USDT) after receiving instructions from abroad, they allegedly transferred USDT to the Binance wallet. The ED further claimed that:
“In the period of investigation, users of WazirX received an incoming cryptocurrency of 880 crore rupees ($120.4 million) through their pool account) Transferred 1,400 crore rupees ($191.6 million) of cryptocurrencies from Binance accounts to Binance accounts. None of these transactions are available on the blockchain for any audit or investigation.”
The ED argues that WazirX has failed to collect information necessary to investigate its customers and transactions in violation of anti-money laundering and terrorism financing laws as well as FEMA. Law enforcement agents state that customers of the exchange are able to transfer crypto to any other person, regardless of jurisdiction or nationality, without the need to provide necessary documents.
WazirX director Nischal Shetty has already responded to the ED’s announcement on Twitter with an extended source:
WazirX is yet to receive any show cause notice from the Enforcement Directorate as reported in today’s media reports.
WazirX is in compliance with all applicable laws.
— Nischal (VazirX) ️ (@Nishchal Shetty) June 11, 2021
In two follow-up tweets, Shetty wrote that WazirX “goes beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) procedures and always provides information to law enforcement authorities as and when required. is.” He added that the exchange has been able to trace all users of the platform using official identity data.
Shetty concluded his reply by saying that, if the exchange receives a formal communication directly from the ED, it will fully cooperate in the investigation. The news of the investigation comes at a time of unexpected crypto regulatory developments in the country, with recent reports suggesting that the authorities may now have Abandoned earlier plans for a blanket bitcoin (BTC) ban. In favor of classifying cryptocurrencies as a specific asset class.