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India’s Enforcement Directorate Probes WazirX For AML Violations

Popular India crypto exchange, WazirX, is being investigated for allegedly violating India’s foreign exchange act (FEMA).

WazirX Investigated By The ED

India’s enforcement directorate released the news of the probe via its Twitter handle.

India’s ED Tweet. Source: Twitter

The 2,790 crore rupees are worth an estimated $390 million because one crore is 10 million in the India number conversion system. Per the Times of India, the enforcement directorate has named the Binance-acquired exchange and two of its directors in the show notice. The two directors involved are Hanuman Mhatre and Nischal Shetty. 

Law enforcement agents accidentally discovered the shady transactions while investigating a money-laundering investigation involving Chinese nationals over illicit online betting applications. According to the ED’s explanation to the Times of India, the suspected persons laundered about 58 crore rupees (about $8 million) which were gains from various criminal operations by depositing the rupees into USDT.

Subsequently, they transferred the tether to different Binance wallets after being instructed from abroad. The ED also stated that: “during the dates under investigation, WazirX had received Rs 880 crore (about $121 million) worth of cryptocurrencies but sent out about rs 1,410 crore (the equivalent of $192 million) to various Binance accounts. But all these transactions cannot be traced on the blockchain for investigation or audit purposes.”

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The ED charged WazirX for failure to obtain relevant details to thoroughly examine its client’s transactions which violate the country’s FEMA laws and anti-money laundering/combating financing of terrorism laws. WazirX’s clients exploited this loophole to transfer these digital currencies to any part of the globe without having to undergo any further scrutiny. 

Wazirx Responds To ED’s Allegations

In a 3-part response on Twitter, one of WazirX’s directors, Nischal Shetty, denied receiving any show-cause notice from the ed.

Nischal WazirX Tweet. Source: Twitter

In a second follow-up tweet, Nischal claimed that the exchange has always complied with the ‘know your customer (KYC) and anti-money laundering (AML) laws. He also stated that the company is ready to collaborate with law enforcement authorities to bring any criminal on its exchange to book.

Nischal said the exchange is ready to cooperate with the ED once it receives formal notice in the concluding tweet. WazirX’s alleged criminal activities come when the authorities are about taking a firm step regarding crypto regulatory measures in the country. 

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Impact of This Allegation On The Government Crypto Decision

Their latest move is to categorize digital currencies as a separate asset class which supersedes their earlier move of a total ban on bitcoin and other cryptocurrencies. The Indian authorities have admitted that it won’t mind evaluating and exploring the crypto space to improve the country’s economy and has even sent a proposed bill to the parliament for consideration by the internal ministerial committee on cryptocurrencies.

This development will further confirm their fears that crypto is only a tool for illegal financial transactions and may change their stance again. Bought by Binance in 2019, WazirX has the highest trading volume of any India crypto exchange.

Bentley Kapoor (India)

Bentley is a cryptocurrency enthusiast and trader, his articles are news and platform review based. His writings are brought to you through his 10 years of experience in the cryptocurrency markets.

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