The agency sends a notice on transactions worth 2,790.74 crore.
The Law Enforcement Branch has issued a show cause notice to the Zanmai Labs Private Limited (WazirX) cryptocurrency exchange and its directors, Nischal Shetty and Sameer Hanuman Mhatre, under the Foreign Exchange Management Act ( FEMA) for transactions involving digital currencies valued at 2,790.74 crore. .
The agency has opened a FEMA investigation based on its findings in the ongoing money laundering investigation into illegal online betting apps allegedly owned by Chinese nationals.
According to the ED, he found that the accused Chinese nationals laundered the proceeds of crime worth around 57 crore by converting the funds into “Tether” cryptocurrencies and then transferring them to Binance, a registered exchange. in the Cayman Islands, and portfolios based on instructions received from abroad.
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The agency said that WazirX allows a wide range of transactions with cryptocurrencies, including their exchange with Indian currency and vice versa; cryptocurrency exchange; person-to-person transactions; and even the transfer / receipt of cryptocurrencies held in its pool accounts to the wallets of other exchanges that might be held by foreigners abroad.
“WazirX does not collect the required documents, in clear violation of the Basic Mandatory Anti-Money Laundering (AML) and Combating Terrorist Financing (CFT) Precautionary Standards and FEMA Guidelines. During the period under investigation, WazirX users, through its pool account, received cryptocurrencies valued at ₹ 880 crore from Binance accounts and transferred cryptocurrencies valued at ₹ 1 400 crore to Binance accounts, ”the ED said.
None of the transactions in question were available on the blockchain for audit or investigation, as alleged.
“It was found that WazirX customers could transfer ‘valuable’ cryptocurrencies to anyone regardless of location and nationality, without any proper documentation, making it a safe haven for users to looking for money laundering and other illegitimate activities, ”he said. noted.
In a statement to The Hindu, WazirX Founder and CEO Nischal Shetty said: “WazirX has yet to receive a justification notice from the Law Enforcement Branch as mentioned in media reports today. WazirX complies with all applicable laws. We go beyond our legal obligations by following the Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever necessary. We are able to track all users on our platform with official credentials. If we receive any formal communication or notice from the emergency service, we will fully cooperate with the investigation.
(Update: This story has been updated with comments from WazirX Founder and CEO Nischal Shetty.)