Breaking: Indian Crypto Exchange Faces Alleged Investigation Over Money Laundering Charges

The Enforcement Directorate (ED), an economic intelligence agency responsible for enforcing economic laws in India allegedly issued a show-cause notice to crypto exchange Wazirx along with its directors today, over crypto transactions amounting to Rs 2,790.74 crore ($38.18 million).

ED said the crypto exchange was served the notice under the Foreign Exchange Management Act (FEMA) 1999, for violating money-laundering laws. The notice was in connection with another ongoing investigation into a Chinese-owned “illegal” online betting application.

The ED in its official statement alleged that Chinese nationals converted over $7 million worth of Indian currency into stablecoin Tether and later transferred it to Binance exchange wallets.

The investigation agency further claimed that during the said period, users received over 880 crores ($12M) in the Wazirx wallet from Binance accounts and sent out 1,400 crores ($19.18M) worth of crypto assets to Binance accounts.

“None of these transactions are available on the blockchain for any audit/investigation.”

WazirX is the largest Indian crypto exchange by the number of registered users and trading volume. The platform was acquired by Binance in late 2019.

ED Says WazirX Didn’t Implement Necessary AML Measures

At present Indian crypto exchanges are self-regulated in absence of any formal regulations in place. Thus crypto exchanges are required to implement necessary anti-money laundering guidelines along with strict KYC regulations, but ED claimed Wazirx didn’t follow the basics.

“WazirX does not collect requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines,”

They added,

“It was found that the WazirX clients could transfer ‘valuable’ cryptocurrencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a haven for users looking for money laundering/other illegitimate activities,”

The show-cause notice along with the serious accusations of not following AML and CFT guidelines can weaken the case for positive regulations in the country.

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Publication date: 
06/11/2021 - 11:38
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