India’s leading crypto exchange WazirX and its directors Nishcal Shetty and Sameer Hanuman were served with a show-cause notice on Friday by the Directorate of Enforcement (ED), an economic law enforcement agency. The notice was issued under the Foreign Exchange Management Act (FEMA), 1999, for a crypto-related transaction of $381.93 million, said the officials.
A public statement released by ED specifies, “The agency has found evidence of non-compliance with forex rules and how users are using the crypto platform to launder money. Similar action is expected against more crypto platforms and their executives this month.”
As per the sources, the WazirX investigation was related to an ongoing money-laundering investigation into illegal online betting applications, which was being operated by some Chinese citizens.
The ED in its official statement said, “Some Chinese nationals have laundered Rs 57 crore by converting rupees into cryptocurrency Tether (USDT) and then transferring the money to Cayman Islands-registered Binance wallets based on instructions received from abroad.”
Soon after ED released a press statement, WazirX tweeted that it has always complied with all the laws. The exchange never did anything illegal or gets involved in it. In fact, whenever the law enforcement authorities needed information regarding anything on the exchange, the platform has helped them. The exchange also went beyond its legal obligations and followed the Know Your Customer (KYC) and anti-money laundering process to comply with the Indian rules.
By the time WazirX was clarifying its side, the exchange did not receive any notice from the ED.
The exchange further added tweeted that it has tracked all the users on its platform with official identity information and as soon as it receives the formal communication or notice from the ED, the exchange would be happy to help them.
Also, it also tried to pacify the WazirX audience by telling them that their funds were absolutely safe on the platform.
The WazirX platform is being used to process a wide range of crypto transactions like exchanging cryptos or vice versa. The exchange also allows the person-to-person transaction and even transfers/receipts of cryptocurrencies from the wallet accounts on its platform to other exchanges’ wallets around the world.
While the investigation was on, Binance transferred $120166376 worth of cryptocurrencies to WazirX’s pool account. And soon the leading Indian crypto exchange transferred around $19 million to the Binance account.
The agency in its statement has specified that the exchange did not gather the requisite and this considered to be a violation of anti-money laundering law and FEMA guidelines.