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

CBDCs are often seen as an alternative or competitor to cryptocurrencies. Only BTC and XRP managed to end the first quarter of the year on a positive note.

Thomson Reuters Regulatory Intelligence has issued the special report “Cryptos on the Rise”, which expands beyond cryptocurrencies like Bitcoin.

Considering the need to develop a regulatory framework, it investigates other cryptocurrency-related instruments such as central bank digital currencies (CBDCs), non-fungible tokens (NFTs), and stablecoins, and highlights policy work in key countries.

Some Misconceptions Examined

The report examines some of the misconceptions that persist about cryptocurrencies, as well as the ramifications for financial stability and the future of money.

In this regard, while there are some structural similarities between crypto assets and central bank digital currencies, CBDCs are best described as the digital equivalent of a country’s fiat currency. The most advanced CBDC so far is China’s digital yuan.

Within the universe of cryptoactives, we also find stable coins or stablecoins, which are a liability of private entities that seek to maintain stability in their price (generally in relation to stable assets such as fiduciary currency).

The report defines a cryptoasset as “a type of digital asset that depends primarily on cryptography and distributed ledger or similar technology.” Such is the concept supported by the Financial Stability Board. In contrast, the Financial Action Task Force, using the term ‘virtual asset’, conceptualizes it as “a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes”.

The latter definition is not limited to digital assets that depend on cryptography; instead, it encompasses Bitcoin and stablecoins.

Market Technical Analysis

According to a report delivered by CoinGecko, the top five cryptocurrencies suffered losses in the first quarter of 2022, in stark contrast to the exuberance and astronomical gains of 2021. Below we explain further.

Cardano (ADA): its price has increased by 4.69% in the last 7 days, but has fallen by 2.37% in the last 24 hours. The current price is $0.51565 per ADA. Cardano is 83.37% below the all-time high of $3.10.

PAX Gold (PAXG): its price has increased by 2.66% in the last 7 days. The price has increased by 0.17% in the last 24 hours. The current price is $1,767.69 per PAXG. PAX Gold is 49.32% below the all-time high of $3,487.68.

Chainlink (LINK): its pricehas increased by 10.87% in the last 7 days. The price has decreased by 4.72% in the last 24 hours. The current price is $7,484 per LINK. Chainlink is 85.85% below the all-time high of $52.88.

Ocean Protocol (OCEAN). Its price has increased by 9.12% in the last 7 days. The price has decreased by 5.87% in the last 24 hours. The current price is $0.194782 per OCEAN. Ocean Protocol is 89.96% below the all-time high of $1.94.

IOTA (MIOTA): its price has increased by 12.32% in the last 7 days. The price has decreased by 2.02% in the last 24 hours. The current price is $0.325777 per MIOTA. IOTA is 94.27% below the all-time high of $5.69.

In short, In the midst of a bear market declared in technical recession in July 2022, opting for a crypto investment now may be a bit risky, due to its high volatility.

However, many governments have already enacted laws or tax statutes, which can contribute to the regulation of prices in these assets that are currently considered high-risk investments.

By Audy Castaneda

Traders leave the crypto market or take short positions as the Chinese government plans to take military countermeasures. The rising tensions have led capital markets like stock and crypto assets to drop due to lower investor confidence.

The US-China tensions due to the upcoming visit of US House Speaker Nancy Pelosi to Taiwan put the crypto market under pressure again. In addition, the USD 300-million Ponzi scheme of Forsage and the USD 200-million stunt of Nomad have caused prices to drop.

A recent smart-contract upgrade allowed cybercriminals to steal almost USD 200 million from the token bridge of Nomad. Besides, the SEC indicted eleven people running the Forsage Ponzi scheme, which raised more than USD 300 million from investors.

Both events have affected the crypto market, as traders began to withdraw money or take short positions amid increased volatility.

According to a local media outlet, the Chinese government plans to take countermeasures, including military ones. The anticipated conflicts and escalation have caused traders to leave the market or take short positions as volatility increases.

The Tension between the United States and China Grows

Nancy Pelosi, the US House Speaker, plans to meet with South Korean, Singaporean, Taiwanese, Malaysian, and Japanese leaders. During her recent visit, the authorities from Singapore highlighted that stable US-China relations would guarantee regional peace and security.

After the visit of Pelosi to Taiwan, the United States and China have become increasingly tense. The Chinese government told the military not to keep silent, but American and Taiwanese armed forces were near the border.

The rising tensions have led capital markets, which include stock and cryptocurrencies, to drop. For example, the market capitalization of crypto markets fell by 3% due to falling investor confidence.

The New York Government Fines Robinhood USD 30 Million

Cryptocurrency-trading platform Robinhood must pay a USD 30 million fine to the New York State Department of Financial Services (NYDFS).

According to the Wall Street Journal, the NYDFS found significant flaws in how Robinhood managed compliance plans.

The NYDFS said Robinhood had inadequate staff to comply with the Bank Secrecy and Anti-Money Laundering Act. In addition, the platform did not significantly upgrade its transaction monitoring method to adapt to developing size, trading volume, and consumer profile.

Robinhood also received an accusation of following policies inconsistent with the NYDFS cybersecurity and virtual currency rules. The regulator pointed out that the platform lacks a telephone contact line for consumer complaints, making consumer safety insufficient.

The NYDFS found these shortcomings thanks to a filing by Robinhood with the US Securities and Exchange Commission (SEC) in 2021. The brokerage initially had to pay a USD 10 million fine, but that expectation rose to USD 30 million.

The latest agreement indicates that the NYDFS will begin enforcement action in the cryptocurrency sector. According to Adrienne A. Harris, the director of the NYDFS, they will continue to investigate and take action. She stated that combating the violation of departmental regulations is critical to protecting users and ensuring the security and robustness of their organization.

By Alexander Salazar