- WazirX gets ED notice for crypto transactions.
- ED issues notice to WazirX under FEMA.
- Transactions of Rs 2790 crore under radar.
The Enforcement Directorate (ED) has issued a show-cause notice to India's leading cryptocurrency exchange platform WazirX and its directors Nischal Shetty and Sameer Mhatre under the Foreign Exchange Management Act (FEMA) 1999, for transactions involving cryptocurrencies worth Rs 2,790.74 crore. The agency explained that the FEMA investigation against the platform was initiated following an ongoing money laundering probe into Chinese-owned "illegal" online betting applications.
"ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transactions involving crypto-currencies worth Rs. 2790.74 Crore," the law enforcement agency tweeted from its official handle.
WazirX is believed to have acquired cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1400 Crore to Binance accounts during the period of investigation.
"During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 Crore approximately by converting the INR deposits into Crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad," the ED said in a statement.
For those unaware, WazirX is one of India's leading crypto exchange platforms and allows a wide range of cryptocurrency transactions including INR exchange and vice-versa, person to person (P2P) transactions, and even transfer/receipt of cryptocurrency held in its pool accounts to wallets of other exchanges.
The ED believes that the platform does not collect the required documents from the investors which is in direct violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines.
"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/ other illegitimate activities," ED's statement said.
Wazir says that it is yet to receive a notice for ED and will cooperate with the investigation.
"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. 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. We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation," the platform told India Today Tech in a statement.