The Enforcement Directorate (ED) has issued a show-cause notice to Mumbai-based firm WazirX for transactions involving cryptocurrency worth Rs 2,790.74 crore. Mumbai-based WazirX and directors Nischal Shetty and Sameer Hanuman Mhatre were sent the notice under Foreign Exchange Management Act (FEMA), says a release by the financial investigation agency.
According to investigations carried out by the ED, it was seen the accused Chinese nationals had laundered proceeds of crime worth around Rs 57 crore by converting the INR deposits into cryptocurrency USDT and then transferring the same to Binance (exchange registered in Cayman Islands) wallets based on instructions received from abroad, says the release. "Hence, a FEMA investigation was initiated and summons were issued under FEMA 1999 to Wazirx Directors and the top traders on this platform. Statement of the CEO of M/s WazirX Mr Nischal Shetty was recorded."
1/3— Nischal (WazirX) ⚡️ (@NischalShetty) June 11, 2021
WazirX is yet to receive any show cause notice from the Enforcement Directorate as mentioned in today's media reports.
WazirX is in compliance with all applicable laws.
However, the cryptocurrency exchange, WazirX has denied receiving any such notice. The company said it is yet to receive any show-cause notice from the Enforcement Directorate. "WazirX is in compliance with all applicable laws. We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required," says Nischal Shetty, CEO and Founder, WazirX.
As per Shetty, the exchange is able to trace all users on its platform with official identity information. "Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation. Also, investors need not worry. Their funds are safe at WazirX," he adds. Cryptocurrency experts claim all cryptocurrency transactions to be transparent. According to them, each crypto transaction can be traced. However, the release by the ED reveals that under a preferential agreement, all transactions between clients of the two exchanges -- WazirX and Binance -- are not being recorded on blockchain.
In the period under investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit/investigation," says the release. WazirX has become a subsidiary of the Cayman Island registered Binance.