Binance-owned WazirX probed in India for alleged money laundering of over $350 million



India’s Ministry of Finance confirmed on August 2 that crypto exchange WazirX is being investigated for money laundering and forex rule violations in two cases.

Reports cited the written response of Pankaj Chaudhary, Minister of State for Finance, to the Upper House of Parliament that the Law Enforcement Directorate is looking into allegations that a total of Rs 2,790 crore (over Rs 350 million dollars) were laundered through the WazirX cryptocurrency exchange.

WazirX executives were summoned earlier for questioning

WazirX, which was acquired by global exchange Binance in 2019, was reportedly one of several national exchanges that came under scrutiny for non-compliance with exchange rules and money laundering guidelines.

Be[In]Crypto had also cited reports in June and again in July that senior exchange executives, including that of WazirX, had been summoned by the economics agency for questioning.

The department has now confirmed that the ED is investigating the platform two cases involving cryptocurrency under the provisions of the Foreign Exchange Management Act of 1999 (FEMA).

“In one of the cases, the investigation conducted so far revealed that an Indian crypto exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of the exchange. Cayman Islands-based Binance. Further, it was found that all crypto transactions between these two exchanges were not even recorded on the blockchains and hence were shrouded in mystery,” Chaudhary said.

In response, he also claimed in the Rajya Sabha that a show cause notice (SCN) was issued under FEMA provisions against WazirX for allowing the outward repatriation of cryptocurrency assets worth Rs 2,790 crore (over $350 million) at unidentified wallets.

Trouble escalates for exchange in another case

The Minister added that in a different case, the Indian exchange was also found to allow foreign users to exchange one cryptocurrency for another on its own platform as well as using transfers from other exchanges. , including FTX and Binance.

This response came after Rajya Sabha member Sushil Kumar Modi asked whether or not some cryptocurrency exchanges allow users from countries like the US and Germany to transact without KYC and AML compliance. , insufficient disclosures and agreements while making Third Party Transfers.

Notably, WazirX co-founders Nishal Shetty and Siddharth Menon reportedly moved to Dubai with their families in April this year due to India’s new crypto taxation regime. Prior to this, executives had distanced themselves from the day-to-day operations of the platform.

That said, the Ministry of Finance has once again reiterated global collaboration to regulate cryptocurrencies.

“Therefore, any policy framework on cryptocurrency can only be effective after meaningful international collaboration on assessing risks and benefits and evolving common taxonomy and standards,” he said. declared.

Meanwhile, India is estimated to have 15-20 million crypto users.

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