The finance minister confirmed that WazirX is under investigation for FEMA violations as the ED looks into money laundering claims. The co-founders of the exchange reportedly moved to Dubai in April due to a new Indian cryptocurrency tax regime.
According to Pankaj Chaudhary, the Indian Finance Ministry, cryptocurrency exchange WazirX is under scrutiny for allegedly laundering money and violating foreign exchange rules.
The official stated the Enforcement Directorate examines claims that the laundering of Rs 2,790 crores, equivalent to over USD 350 million, occurred on WazirX.
The Enforcement Directorate Previously Called WazirX Executives for Questioning
WazirX, acquired by Binance in 2019, was reportedly among the exchanges under scrutiny for violating foreign exchange rules and money laundering guidelines.
In June and again in July, the economic agency summoned the top executives of Binance and WazirX for questioning.
The finance ministry stated that the ED investigates the platform in cryptocurrency cases under the Foreign Exchange Management Act (FEMA) 1999 provisions.
The investigation has revealed that the Indian cryptocurrency exchange Wazirx was using the walled infrastructure of Binance. Besides, they found that the transactions between the two platforms mysteriously did not appear on the blockchains.
In response, Chaudhary discussed in Rajya Sabha, the Council of States, a Show Cause Notice (SCN) under FEMA provisions against WazirX. He stated that the exchange allowed the external repatriation of Rs 2,790 crores (over USD 350 million) worth of cryptocurrencies to unidentified wallets.
The Exchange Faces Escalating Problems in Another Case
The Indian finance minister also added that the platform allowed foreign users to exchange one crypto asset for another. He pointed out that they used transfers from other cryptocurrency exchanges like FTX and Binance.
That happened after Sushil Kumar Modi, a Rajya Sabha member, asked some questions about cryptocurrency exchanges. The latter wanted to know whether those platforms allowed users from countries like the US and Germany to trade without KYC and AML compliance. He also mentioned insufficient disclosure and agreements during transfers from third parties.
Nishal Shetty and Siddharth Menon, the co-founders of WazirX, reportedly moved to Dubai in April due to the new Indian cryptocurrency tax regime. The executives had previously distanced themselves from the daily operations of the platform.
After saying that, the finance minister reiterated the need for global collaboration to regulate cryptocurrencies. He considers that there must be an agreement between the proposals to control those assets in various countries.
Pankaj Chaudhary explained that any cryptocurrency policy framework could only be possible through significant international collaboration. That would involve the assessment of risk and benefit assessment and the evolution of common taxonomy and standards.
India has between 15 and 20 million cryptocurrency users, a significantly high number despite tight regulations. The authorities of the Asian country have exchanges under their sights to ensure compliance with KYC and AML.
Bitcoin is trading at around USD 23,398 and has accumulated a 10.2% gain over the last week. Its daily trading volume is above USD 37.48 billion, while its market capitalization is about USD 447.16 billion, according to CoinGecko.
By Alexander Salazar
