ED probing crypto exchange WazirX for outward transfer of crypto assets worth Rs 2,790 crore to unknown wallets, CIO News, AND CIO

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Minister of State for Finance Pankaj Chaudhary said on Tuesday that the Enforcement Directorate was investigating him for authorizing the outward transfer of crypto assets worth Rs 2,790 crore to unknown wallets .

The ED is investigating two cryptocurrency-related cases against WazirX under the provisions of the Foreign Exchange Management Act 1999 (FEMA), it said in a written response to the Rajya Sabha.

“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,” he said.

As a result, he said, a show cause notice (SCN) was issued under FEMA provisions against WazirX. Moreover, in another instance, it is noticed that Indian exchanges i.e. WazirX has allowed the request of foreign users to convert one crypto to another on its own platform as well as using the transfer from third-party exchanges, namely FTX, BINANCE, etc., he said.

In response to another question, Chaudhary said that cryptocurrencies and non-fungible tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage.

Therefore, any legislation to regulate or prohibit possession and trade in such a borderless sector can only be effective after significant international collaboration on risk-benefit assessment and evolution of taxonomy and common standards, he said.

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