cft

The ED issues a show cause notice to WazirX and the directors under FEMA.

For crypto transactions worth ₹2,790.74 crore


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Devendra Singh Khati

2 years ago | 1 min read

The Enforcement Directorate has issued a show cause notice under the Foreign Exchange Management Act, 1999 to cryptocurrency exchange Zanmai Labs Pvt Ltd, also known as WazirX, and its Directors Nischal Shetty and Sameer Hanuman Mhatre for transactions involving cryptocurrencies worth Rs. 2,790.74 crore.

The ED stated in a statement that it has launched a FEMA investigation based on the ongoing money laundering investigation into Chinese-owned illegal online betting applications.

During the investigation, it was discovered that the accused Chinese nationals had laundered approximately 57 crore in criminal proceeds by converting INR deposits into cryptocurrency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad.

“WazirX allows a wide range of cryptocurrency transactions, including their exchange into Indian rupees and vice versa; exchange of cryptocurrencies; Person to Person (P2P) transactions; and even transfer and receipt of cryptocurrency held in its pool accounts to wallets of other exchanges that may be held by foreigners in foreign locations,” the ED said.

WazirX also stated that it does not collect the necessary documents, which is a clear violation of the basic mandatory Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT) precaution norms and FEMA guidelines.

The ED stated that none of these transactions are available on the blockchain for audit or investigation, and that it was also discovered that customers of WazirX could transfer 'valuable' crypto-currencies to any person, regardless of location or nationality, without any proper documentation whatsoever, making it a safe haven for users looking for money laundering or other illegitimate activities.

During the investigation period, WazirX users received incoming cryptocurrency worth 880 crore from Binance accounts and transferred out cryptocurrency worth 1,400 crore to Binance accounts via its pool account.

After reading the news from TheHindu, I felt like sharing it with everyone. I trade mostly on WazirX and BuyUcoin. And looking forward to Nischal Shetty Comments on the same.

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Devendra Singh Khati

As a writer and copywriter, I've recently focused on making blockchain more accessible to those who are unfamiliar with the technology. As someone who has been around for a while, I understand how difficult it can be to avoid technical jargon when explaining any blockchain concept.


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