The Enforcement Directorate 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).
According to ED, users of WazirX have received cryptocurrency worth Rs 880 crore via its pool account from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts during the period under investigation.
"WazirX did not collect the 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," said the officials. The cryptocurrency exchange allows a range of transitions including exchange of cryptocurrency with rupees and vice-versa, person-to-person transactions, and transfer to crypt held in its pool accounts to wallets of other exchanges. These wallets can be held by foreigners in foreign locations.
The officials said that none of the transactions are available on the blockchain for any audit or investigation. "It was found that the WazirX Clients could transfer 'valuable' crypto-currencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering or other illegitimate activities," added the officials.
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