Indian authorities freeze $8.1M in WazirX funds as part of AML investigation

Indian authorities freeze $8.1M in WazirX funds as part of AML investigation

India’s Directorate of Enforcement, or ED, has introduced it froze roughly $8.1 million in funds and performed a search related to cryptocurrency alternate WazirX as part of an investigation into immediate private mortgage fraud.

In a Friday announcement, the Directorate of Enforcement alleged WazirX facilitated transactions by unnamed fintech corporations “to purchase crypto assets and then launder them abroad” as part of a scheme involving Chinese-backed firms circumventing India’s licensing laws. In its investigation, the ED mentioned it ordered WazirX financial institution accounts containing 646.7 million Indian rupees — roughly $8.1 million on the time of publication — frozen and performed a search related to co-founder Sameer Mhatre.

According to the regulator, the investigation was nonetheless ongoing. However, the ED claimed the crypto alternate had “lax KYC norms” and “loose regulatory control” of transactions between WazirX and Binance, and didn’t file the knowledge wanted to confirm the origin of the funds used to buy crypto in the alleged fraud.

“Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets,” mentioned the ED, including:


“WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.”

In a Friday Twitter thread, Binance CEO Changpeng Zhao mentioned the agency did “not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.” He added that “Binance only provides wallet services for WazirX as a tech solution,” whereas WazirX was answerable for KYC and different operations on the alternate. 

WazirX director Nischal Shetty disputed many of CZ’s claims, saying on Twitter that the crypto alternate “was acquired by Binance Zanmai Labs” and “is an India entity owned by me & my co-founders”. He  mentioned Binance was answerable for working crypto buying and selling pairs and processing withdrawals.

Related: Indian regulator probes crypto alternate for alleged foreign exchange regulation violations

With the exodus of many crypto corporations in China following a regulatory crackdown, many firms have reportedly turned to the markets in India. The ED reported that some fintech corporations “backed by Chinese funds” had “piggybacked” on Indian firms with defunct non-banking monetary firm licenses to supply lending providers to residents.

The ED took comparable motion in opposition to WazirX in June 2021, ordering the crypto alternate to point out trigger associated to transactions of a money-laundering investigation into unlawful on-line betting functions involving Chinese nationals. Shetty mentioned on the time that the alternate went “beyond [its] 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.”

Cointelegraph reached out to WazirX, however didn’t obtain a response on the time of publication.

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