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WazirX gets ED notice over Rs 2790 crore crypto transaction

The Enforcement Directorate (ED) has issued a showcause notice to India's leading cryptocurrency exchange platform WazirX and its directors Nischal Shetty and Sameer Mhatre under FEMA.

twitter-logoManas Tiwari | June 11, 2021 | Updated 13:46 IST
WazirX
WazirX is India's leading crypto exchange platform.

Highlights

  • 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.

India Today Tech has reached out to WazirX for their statement on the issue and will update the story after that.

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.

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