On August 5, the Enforcement Directorate (ED) frozen the bank account of a director of Zanmai Lab Pvt Ltd, the operator of Indian cryptocurrency exchange WazirX.
It is reported that bank assets worth Rs 64.67 crore (over $8 million) were confiscated following a raid by the agency in Hyderabad.
Binance-backed WazirX under investigation
Minister of State for Finance Pankaj Choudhary confirmed in the Parliamentary Upper House that the Enforcement Directorate is probing claims that a total of Rs 2,790 crore (over $350 million) was laundered through the Binance-backed exchange. two cases.
This time, the director of WazirX was charged with allegedly assisting fast-lending app companies in the purchase and transfer of virtual crypto assets used by central agencies to launder illicit funds.
NDTV reported that the platform’s co-founder and chief technology officer Samir Mhatre was raided, with the ED saying, “He has full access to WazirX’s database, but is not giving details of the transaction.”
This essentially means that the director’s premises were raided under the Prevention of Money Laundering Act, 2002 (PMLA) after non-cooperation with the agency.
Happen[In]Crypto had earlier also cited reports that the ED is investigating the platform on two matters under the provisions of the Foreign Exchange Management Act, 1999 (FEMA). While in one case, the platform is being investigated for allowing foreign users to exchange one cryptocurrency for another using their own exchange as well as transfers from other foreign exchanges. In another case, a “secret wrapped” transaction between Binance and WazirX is being investigated.
Accused of helping illegal loan apps for money laundering
Another local report quoted the Enforcement Directorate as saying: “When the police and ED launched the crackdown, loan app firms used the cryptocurrency route to extort money from the country. Most of the money was routed through crypto assets through WazirX. Transferred to Hong Kong. We found evidence regarding the transfer of funds in crypto assets. We have frozen WazirX’s crypto assets worth over Rs 100 crore.”
WazirX allegedly assisted 16 accused fintech firms in using the cryptocurrency channel to launder criminal proceeds.
“By encouraging ambiguity and easing Anti-Money Laundering (AML) norms, it has actively assisted approximately 16 accused fintech companies in legalizing proceeds of crime using the crypto route. Hence, the PMLA, 2002 Under this, movable assets worth Rs 64.67 crore lying with WazirX were attached,” the central agency said.
And now it is also reported that the investigating agency is tracking Indian NBFCs and fintech partners of Rapid Loan App working against the guidelines of the central bank. These illegal applications were operated to levy exorbitant interest rates and misuse of personal information collected from loan applicants in violation of RBI norms.
“Various fintech companies backed by Chinese funds could not get NBFC license from RBI to do lending business. So they paved the way for MoUs with the defunct NBFCs so that they can revert to their licences.
“It has been observed that the maximum amount was paid to the WazirX exchange and the crypto assets thus purchased were remitted to an undisclosed foreign wallet,” the ED note said.
Transactions between Binance and WazirX still unclear
That said, the ED is reportedly also probing the earlier statements of the exchange and its co-founder. “Earlier, their Managing Director Nischal Shetty claimed that WazirX is an Indian exchange that controls all crypto-crypto and INR-crypto transactions and only has an IP and preferential agreement with Binance, “
“But now, Zanmai claims that they are only involved in INR-crypto transactions, and all other transactions are done by Binance on WazirX. They are giving contradictory and ambiguous answers to avoid the monitoring of Indian regulatory agencies.’
Although further investigation is on, the statement of the exchange is awaited.
Today’s last tweet by the company’s Managing Director Nischal Shetty explained how decentralization solves the problem of monopoly by centralized institutions.
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