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Rs 2,790 crore money laundering probe: Yet to receive ED notice, compliant with all laws, says WazirX

The ED said that it initiated the investigation on the basis of the ongoing money laundering investigation into Chinese owned illegal online betting apps

Published: 11th June 2021 02:16 PM  |   Last Updated: 11th June 2021 04:02 PM   |  A+A-

Enforcement Directorate

Enforcement Directorate (File Photo | PTI)

Express News Service

BENGALURU: The founder and CEO of WazirX, India’s largest cryptocurrency exchange, Nischal Shetty has said that the company is yet to receive any notice from the Enforcement Directorate over an ongoing money laundering investigation for transactions worth Rs 2,790 crore under the Foreign Exchange Management Act (FEMA).

"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. 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. Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation," Shetty said.
 
The ED earlier said that it initiated the investigation on the basis of the ongoing money laundering investigation into Chinese owned illegal online betting apps. “In the period under investigation, users of WazirX via its pool account, have received incoming crypto-currency worth INR 880 crore from Binance accounts and transferred out crypto-currency worth INR 1400 crore to Binance accounts,” the investigating agency said in a statement.

The Wazir X chief however said that the company is able to trace all users on the platform with official indentity information. "We assure that all the funds are safe on the platform," he added.

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 the INR deposits into crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad, the agency said in a statement.

The investigation agency charged Wazir X, which has millions of users on its platform, with not collecting the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines.

"It was found that WazirX Clients could transfer 'valuable' crypto-currencies 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 ED said.

In November 2019, global cryptocurrency exchange and blockchain ecosystem Binance announced its acquisition of WazirX. The company had said that WazirX’s unique auto-matching engine will be integrated into the Binance Fiat Gateway platform itself, bringing easy cryptocurrency access to over a billion people. "Users on Binance.com will be able to directly place orders on Binance.com and the Binance iOS or Android app to purchase Tether (USDT) against INR. This integration will allow users to trade any digital asset available on Binance.com with the purchase of USDT from the WazirX digital asset marketplace," the global firm said at the time of the acquisition.

India has currently not regulated the crypto currency industry even as the platforms have seen an exponential rise in users during the pandemic. An earlier cryptocurrency ban proposed by RBI was set aside by the Supreme Court last year which allowed the exchanges to trade cryptocurrencies. Industry lobbyists have urged the government to take a calibrated approach and regulate the digital assets over a blanket ban.



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