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

08/04/2022

1 minute read

2022.08.04 17:34

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 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 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 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 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 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 Founder, 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.