BENGALURU: Crypto exchange WazirX, which has over 12 million users, on Monday said the Enforcement Directorate (ED) has unfrozen its bank accounts and that it will continue its banking operations as usual. Last month, the ED conducted searches on the premises of one of the directors of Zanmai Labs, which owns WazirX, and froze their bank balances worth Rs 64.67 crore. The agency has been conducting money laundering investigations against many non-banking financial companies and their fintech partners for predatory lending practices in violation of the RBI guidelines. It said these fintech apps have shut operations and diverted huge profits.
WazirX in a blog post said it is like any other intermediary whose platform may have been misused.
While freezing bank balances, payment gateway balances and crypto balances of Flipvolt cryptocurrency exchange recently, the ED said during fund trail investigation, it found funds, which were proceeds of crime derived from predatory lending practices, were deposited by entities including accused NBFCs and their fintech companies into the INR wallets.
As per the agency, cryptocurrencies purchased by these entities were transferred to various unknown foreign wallet addresses. The ED has been conducting an investigation of 16 fintech firms and instant loan apps, some of them happened to use the WazirX platform. Apart from these firms, the ED conducted search operations on the premises of Razorpay, Cashfree Payments and Paytm recently.
The agency is investigating a specific set of merchants. Fintech firms say the RBI’s new guidelines on digital lending apps will help borrowers find out genuine players. When asked about the procedures a fintech firm follows before onboarding merchants, Pallav Jain, CEO and co-founder, ShopSe, an instant EMI platform, said its merchant partners must follow a number of safeguards to mitigate identity-related concerns.
Edul Patel, CEO and co-founder of Mudrex, a crypto investing platform, said they keep track of all the transactions occurring on its platform with the help of crypto transaction monitoring partners for better safety and security purposes. “We do not hold any custody of the user’s INR in our wallets. Users on our platform fund their wallets by purchasing stable coins using INR. Those stable coins are held by our users in their wallets, which is backed by Binance, the largest crypto exchange globally,” Patel said.