After the director refused to cooperate, the ED raided his facilities under the Prevention of Money Laundering Act. The agency stated that WazirX helped 16 FinTech companies accused of laundering illicit money with cryptocurrencies.
The Enforcement Directorate (ED) recently blocked the bank account of one of the directors of the Indian cryptocurrency exchange WazirX.
The agency had reportedly frozen bank assets worth Rs 64.67 crore (over USD 8 million) before conducting a raid in the city of Hyderabad.
The ED Investigates Binance-Backed Exchange WazirX
Pankaj Chaudhary, the Indian Finance Minister, confirmed that the Enforcement Directorate was investigating Binance-backed cryptocurrency exchange WazirX. He stated that it had allegedly laundered Rs 2,790 crore, equivalent to over USD 350 million.
The agency accused the director of WazirX of helping fast lending app companies buy and transfer cryptocurrencies used to launder money.
According to local media, the ED said it conducted the raids on Sameer Mhatre, the co-founder and CTO. Despite adding that they had remote access to the WazirX database, they gave no transaction details.
The raid occurred on the facilities of the director under the Prevention of Money Laundering Act (PMLA) after he allegedly refused to cooperate.
The ED investigates the platform regarding two cases under the Foreign Exchange Management Act of 1999 (FEMA). In one case, there are proofs that the exchange allows foreign users to exchange one cryptocurrency for another and use transfers from other platforms. They also investigate covert transactions that take place between Binance and WazirX.
The ED Accuses WazirX of Helping Illicit Lending Apps Launder Money
According to the ED, the lending app firms were using the cryptocurrency route to take money out of India when they began the crackdown. They said they found evidence of cryptocurrency-related transfers, leading them to freeze over Rs 100 crore worth of WazirX crypto assets.
The agency stated that WazirX allegedly helped 16 FinTech companies accused of using the cryptocurrency channel to launder illicit money.
The ED pointed out that WazirX actively assisted those companies, encouraging obscurity and having lax anti-money laundering (AML) regulations. Therefore, they froze crypto assets amounting to Rs 64.67 crore on the platform under the 2002 PMLA.
There are rumors that the detective agency is tracking Indian NBFCs and illicit fast lending app FinTech partners. The ED found that they violated RBI regulations to extort excessive interest rates and misuse user information.
The agency said several FinTech companies backed by Chinese funds could not obtain a license from RBI to conduct lending activities. Therefore, they devised the MoU path with the defunct NBFC to accompany their authorization.
Transparency Still Lacks in the Transactions between Binance and WazirX
The ED is reportedly investigating previous statements from the exchange and its co-founder. They stated that its CEO Nischal Shetty had said WazirX controls all crypto transactions and has only one IP and preferential treatment with Binance.
While they carry out further investigations, there are expectations of a statement from the exchange. They expect to find evidence that might lead them to solve the case in the short term.
The CEO of WazirX, Nischal Shetty, recently commented on Twitter that decentralization solves the problem caused by the monopoly of centralized institutions.
By Alexander Salazar