India’s Directorate of Enforcement Suspends $8,1M WazirX Funds

India’s Directorate of Enforcement Suspends $8,1M WazirX Funds

ED takes action to investigate Money Laundering claims connected to crypto exchange WazirX. 

India’s Directorate of Enforcement (ED), India’s financial crime-fighting agency, has frozen all of the WazirX funds due to their Money Laundering investigation

According to the statement shared on August 5th, the ED suspects that the company has assisted “fintech companies backed by Chinese funds” to buy various crypto assets and “launder them abroad”

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These fintech companies have not received the Reserved Bank of India (RBI) approval to have lending business in the country. Therefore, apparently, they used WazirX to circumvent the Indian authorities

Indian authorities have issued to freeze WaziriX bank accounts, which contain 646,7 million rupees (around $8,1 million)

According to Indian authorities, the company’s director, Sameer Mhatre, had multiple opportunities to provide ED with detailed information about transaction history. However, chose to ignore it. 

ED notes that it has given countless opportunities for WaziriX to provide information about crypto transactions involving fintech companies and “reveal KYC of the wallets”.

The Directorate of Enforcement claimed that: 

WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.

However, on August 7th, the company took to Twitter to announce that no operations were paused and everything is operating as usual. 

The document issued by the Indian financial crime agency has also noted that WazirX has connections with Binance, one of the largest crypto exchanges. ED claims that Binance is one of the owners of Zanmai Labs Pvt Ltd, the company that owns WazirX

Binance CEO Changpeng Zhao used Twitter to deny these claims, saying “Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.“

One of the founders of WazirX Nischal Shardeum has also used Twitter to state that “WazirX was acquired by Binance” and that the company “operates crypto to crypto pairs, processes crypto withdrawal…”. 

The continued argument between Zhao and Shardeum lasted until August 6th. 

Gile K. - Crypto Analyst

by Gile K. - Crypto Analyst, BitDegree