The Enforcement Directorate (ED) announced on August 5, that it has frozen Rs 64.67 crore in bank deposits as part of a money laundering investigation into cryptocurrency exchange WazirX. The central investigation agency said it raided one of the directors of Zanmai Labs Private Limited, which owns WazirX, on August 3 in Hyderabad and accused him of being “uncooperative.”
Last year, the agency charged WazirX with violating the Foreign Exchange Management Act (FEMA). “It was discovered that Sameer Mhatre, director, WazirX, has complete remote access to WazirX’s database, but despite this, he is not providing the details of the transactions relating to the crypto assets, purchased from the proceeds of crime of instant loan app fraud,” according to the ED statement.
The investigation agency is looking into money laundering against several NBFCs and their fintech partners for “predatory lending practices in violation of Reserve Bank of India guidelines.” The ED discovered a large number of funds that were diverted by fintech firms to buy crypto assets and allegedly laundered abroad during the investigation. According to the report, the maximum amount of funds was diverted to the WazirX exchange.
Pankaj Chaudhary, minister of state for finance, told the Rajya Sabha on August 2 that the ED is investigating alleged money laundering of Rs 2,790 crore through crypto exchange WazirX.
He stated that two cryptocurrency-related cases have been filed against WazirX under FEMA provisions.
“So far, investigation has revealed that one Indian cryptocurrency exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India, was using the walled infrastructure of Cayman Island-based exchange Binance.” Furthermore, it was discovered that all crypto transactions between these two exchanges were not even recorded on the blockchains, leaving them shrouded in mystery,” Chaudhary said in a written response to the Rajya Sabha.
In another case, WazirX, an Indian exchange, has allowed foreign users’ requests to convert one crypto into another on its own platform as well as through transfers from third-party exchanges such as FTX, Binance, and others, he said.
According to the ED’s statement, WazirX made no efforts to trace these crypto assets. “It has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route by encouraging obscurity and having lax anti-money laundering norms,” it said.
As a result, the ED stated that equivalent movable assets worth Rs 64.67 crore held by WazirX were frozen under the Prevention of Money Laundering Act.
