The enforcement directorate (ED) has issued a show cause notice to India’s biggest cryptocurrency exchange WazirX and its directors for contravention of Foreign Exchange Management Act (FEMA) for transactions involving cryptocurrencies worth Rs2,790.74 crore.
The ED notice has been sent to the company and its directors Nischal Shetty and Sameer Hanuman Mhatre for transactions involving cryptocurrencies worth Rs2,790.74 crore.
In a statement, the ED says it has initiated an investigation under the FEMA as part of its investigation into the 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 Rs57 crore approximately by converting the Indian rupee deposits into crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) wallets based on instructions received from abroad,” the ED said in a statement.
WazirX is owned by Binance.
ED says, “In the period under investigation, users of WazirX via its pool account, have received incoming crypto-currency worth Rs880 crore from Binance accounts and transferred out crypto-currency worth Rs1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit or investigation”.
The ED also says WazirX does not collect the requisite documents while violating the basic mandatory anti-money laundering and combating of financing of terrorism precaution norms and FEMA guidelines.
“It was found that the WazirX clients could transfer ‘valuable’ crypto-currencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering or other illegitimate activities,” the agency’s statement said.