ⓘ Featured image: A file-photo of Nischal Shetty, CEO of WazirX
The Enforcement Directorate (ED), the specialized agency under the Department of Revenue, Ministry of Finance; on Friday, issued a show-cause notice to WazirX, India’s homegrown leading cryptocurrency exchange for buying, selling and trading cryptocurrency. WazirX is notably the biggest cryptocurrency exchange in India by the measure of trading volume. According to ED, WazirX has violated the provision of Foreign Exchange Management Act, for crypto deals worth INR 2,790.74 crore – being realized as an ongoing money laundering probe by some Chinese illegal online betting applications.
The notice was sent to the directors of WazirX, Nischal Shetty and Hanuman Mhatre. ED alleges that it has discovered some Chinese nationals are laundering proceeds of crime amounting to INR 57 crore by converting rupee into crypto tether (USDT) and then transferring the same to Binance wallets.
“In the period under investigation, users of WazirX via its pool account have received incoming cryptocurrency worth ₹880 crore from Binance accounts and transferred out cryptocurrency worth ₹1,400 crore to Binance accounts. None of these transactions are available on the blockchain for audit or investigation,” said ED in a statement
According to multiple news reports, ED also had issued summons to some high-value cryptocurrency traders on registered on WazirX in March. And the emails regarding the same were sent to WazirX which remained unanswered.
Nischal Shetty, CEO of WazirX commented that the company has not received the ED notice yet and affirmed that the crypto exchange is in compliance with all applicable laws.
“We go beyond our legal obligations by following know your customer (KYC) and 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 ED, we’ll fully cooperate,”
ED also claims that WazirX did not collect requisite documents – violating basic required anti-money laundering (AML) rules and FEMA guidelines. The government agency also asserted that WazirX users can transfer cryptocurrencies irrespective of their location and nationality without proper documentation – also making the platform a straight gateway for practicing illegitimate activities.
The government during Parliament’s Union Budget session 2021-22, proposed ‘Official Digital Currency Bill – 2021’ also called as ‘The Cryptocurrency Bill India 2021‘ in order to regulate all crypto transactions whilst banning all private cryptocurrencies like Bitcoin etc.
Started in 2018, WazirX, registered as Zanmai Labs Pvt. Ltd, was acquired by Cayman Islands-based crypto exchange Binance in 2019. The company has around 5 million registered users in India.