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India’s WazirX Comes Under Government Microscope for Laundering $350m

The Indian government’s Directorate of Enforcement (ED) has announced a probe into Binance-acquired WazirX for allegedly laundering $350m. The ministry of finance has issued a Show Cause Notice to the Indian exchange, under the provisions of the Foreign Exchange Management Act (FEMA).

The case against WazirX has been going on since June 2021. However, the minister of state for finance, Pankaj Chaudhary, recently discussed the case in Rajya Sabha, the upper house of the Indian parliament, and brought it back into focus.

Crypto exchange WazirX, which describes itself to be India’s most trusted Bitcoin and cryptocurrency exchange on its website, was also in the news last year for tax evasion of $5m. However, GST Mumbai East Commissionerate of Mumbai Zone revealed that WazirX paid the due tax along with the penalty soon after.

Charges Against WazirX

Although the original link to the largely circulated government notice can’t be traced at the moment, it states that “currently cryptocurrencies are unregulated in India” and that “the government does not collect any data on such information.” 

The ED is looking into the company for allowing outward remittance of crypto assets to unknown wallets and for allowing the foreign users’ request to convert one crypto into another on its own platform as well as by using a transfer from third-party exchanges namely FTX, Binance, etc.

WazirX Transactions “Cloaked in Mystery”

Chaudhary told Rajya Sabha that, “In one of the cases, investigation done so far has revealed that one Indian Crypto-exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India, was using the walled infrastructure of Cayman Island based exchange Binance.” He said, “Further it has been found that all crypto transactions between these two exchanges were not even being recorded on the blockchains and were thus cloaked in mystery.”

On the Flipside

  • According to media reports, WazirX said it has not been served a notice for money laundering. One of the two WazirX Founders, Nischal Shetty, tweeted saying no new information since June 2021 has come up. 

Why You Should Care

WazirX founders have moved to Dubai, along with their families. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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Author

Akriti Seth is a Zurich-based business journalist with over six years experience of being a pharma, finance, state and news reporter. As a correspondent for organisations like Channel NewsAsia and Bloomberg TV India, she covered a wide range of subject matter. Being hands-on with social media and current affairs gives her a unique perspective on fintech and crypto. She also enjoys photography and blogging.