• Thursday, August 18, 2022


India agency ED raids crypto exchange platform WazirX, freezes bank assets worth £6.7m

Cryptocurrencies: iStock image

By: Shubham Ghosh

India’s Enforcement Directorate (ED) on Friday (5) conducted searches at the premises of one of the directors of Zanmai Labs Private Limited which owns and operates WazirX, an cryptocurrency exchange platform.

The ED reportedly froze bank assets worth Rs 64.67 crore (£6.7 million) during and after the search operation.

WazirX is a cryptocurrency exchange that serves as a platform for trading digital currencies such as Bitcoin, Tron, Ethereum, Litecoin and Ripple.

The ED, a central financial intelligence agency, took action against the director on charges of aiding accused instant loan-app companies in laundering fraud money through the buying and transferring of virtual crypto assets.

“When police and ED started crackdown, the loan app firms used the cryptocurrency route to take money out of the country. Most of the money is transferred to Hong Kong through crypto assets via WazirX. We found evidence regarding the transfer of money to crypto assets. We have frozen more than Rs 100 crore (£10.4 million) crypto assets of WazirX,” the Times of India quoted the ED as saying. 

The ED is presently carrying out money-laundering investigation against several Indian non-banking financial companies and their fintech partners for lending practices that violate guidelines set by the Reserve Bank of India and for using telecallers that abuse borrowers for extorting high interest rates from them.

On Tuesday (2), India’s finance ministry had informed the Rajya Sabha or the Upper House of the Indian parliament that the ED was probing a couple of cases against WazirX under the provisions of FEMA or Foreign Exchange Management Act, 1999 (FEMA).

“It has been found that all crypto transactions between these 2 exchanges were not even being recorded on the blockchains and were thus cloaked in mystery. Accordingly, a show cause notice (SCN) has been issued under the provisions of FEMA against WaxirX for allowing outward remittance of crypto assets worth Rs 2,790 crore (£291.5 million) to unknown wallets,” the ministry said, adding that WazirX allowed foreign users’ request to convert one crypto into another by using transfers from third-party exchanges, namely FTX, Binance, etc.

Earlier this year, the ED had issued a show-cause notice to cryptocurrency exchange WazirX and its directors Nischal Shetty and Sameer Mhatre for allegedly violating guidelines pertaining to transactions worth Rs 2,790.74 crore (£291.6 million).

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