The Indian Ministry of Finance has confirmed that the Indian crypto exchange platform Wazirx is being investigated for money laundering and flouting forex rules in two cases.
Pankaj Chaudhary, Minister of State for Finance said in a written reply to the Rajya Sabha that the Directorate of Enforcement (ED) is looking into claims that a total of Rs 2,790 crore (over $350 million) was laundered through the WazirX.
WazirX was acquired by Binance in 2019 and is currently being investigated under the provisions of the Foreign Exchange Management Act, 1999 (FEMA).
Chaudhary said, “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.”
“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.”
He further said that a Show Cause Notice (SCN) has been issued to WazirX for permitting the outward remittance of crypto assets worth Rs 2,790 crore to unidentified wallets.
In the second case, it was seen that WazirX allowed foreign users to exchange one crypto for another on its own platform by using transfers from other exchanges, including FTX and Binance.
Also Read: WazirX Co-Founders Reportedly Shifts Their Base to Dubai
This fact was disclosed after Rajya Sabha member Sushil Kumar Modi enquired whether or not some crypto exchanges permitted users from countries like the U.S. and Germany to transact without KYC and AML compliance, insufficient disclosures, and agreements while carrying out third-party transfers.
In response Chaudhary said, “…any policy framework on cryptocurrency can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”
