India’s financial crime-fighting agency the Enforcement Directorate has sent a show-cause notice to the country’s biggest cryptocurrency exchange WazirX and its directors for contravention of India’s foreign exchange rules for transactions involving cryptocurrencies worth over Rs 2,700 crore.
The notice has been sent to the company and its directors Nischal Shetty and Sameer Hanuman Mhatre for transactions involving cryptocurrencies worth Rs 2790.74 crore, the agency said on Friday
The ED said in a statement that it initiated an investigation under the Foreign Exchange Management Act or FEMA as part of its investigation into Chinese-owned “illegal” online betting applications.
“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 ED said in a statement.
WazirX is owned by Binance.
“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. None of these transactions are available on the blockchain for any audit/investigation,” the ED said.
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The agency also said that WazirX does not collect the requisite documents while violating the “basic mandatory” Anti Money Laundering and Combating of Financing of Terrorism precaution norms and FEMA guidelines.
“It was found that the 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,” ED’s statement said.
“WazirX is yet to receive any show-cause notice from the Enforcement Directorate as mentioned in today’s media reports,” the company’s co-founder Nischal Shetty told Entrackr in a statement.
“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. We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation,” he added.