Crypto Concerns: ED issues show cause notice to WazirX

The Enforcement Directorate (ED) has issued a show-cause notice to cryptocurrency exchange M/s Zanmai Labs Pvt Ltd popularly known as WazirX, and its Directors Nischal Shetty and Sameer Hanuman Mhatre under Foreign Exchange Management Act, 1999, (FEMA) for transactions involving cryptocurrencies worth ₹2,790.74 crore.

ED initiated FEMA investigation on the basis of the ongoing money-laundering investigation into Chinese-owned illegal online betting Applications.

During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth ₹57 crore approximately by converting the INR deposits into cryptocurrency Tether or USDT and then transferring the same to Binance Wallets.

In the period under investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth ₹880 crore from Binance accounts and transferred out cryptocurrency worth ₹1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit/investigation.

As per some reports, WazirX does 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.