WazirX has been asked to explain ₹2,971 crore of crypto transactions allegedly used to launder money

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WazirX has been asked to explain ₹2,971 crore of crypto transactions allegedly used to launder money
Nischal Shetty and Sameer Mhatre have been sent a show cause notice by the Enforcement Directorate.WazirX
  • India's Enforcement Directorate (ED) has sent a show cause notice to WazirX’s founder Nischal Shetty and director Sameer Mhatre.
  • The notice asks the two to explain cryptocurrency transactions worth ₹2,971 crore.
  • The ED had accused WazirX of not collecting the required documents to carry out KYC verification and facilitating money laundering.
  • Shetty claims that WazirX has not received any show cause notice as of June 11 but plans to cooperate with the authorities once any formal communication comes through.
India’s financial investigation agency, the Enforcement Directorate (ED), is cracking down on the biggest cryptocurrency exchange in the country, WazirX, for using the platform to aid money laundering.

The ED has sent a show cause notice to WazirX’s founder and director Nischal Shetty to explain cryptocurrency transactions worth ₹2,971 crore under the Foreign Exchange Management Act (FEMA) 1999. In addition to Shetty, the ED notice also names another director, Sameer Mhatre.

"WazirX is yet to receive any show cause notice from the Enforcement Directorate as mentioned in today's media reports. WazirX is in compliance with all applicable laws," Shetty told Business Insider in a statement. "Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation."

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What are the accusations leveled against WazirX?


As part of its ongoing investigation into an investigation into illegal online betting apps owned by Chinese nationals, the ED has accused WazirX of not collecting the required documents to carry out KYC (know your customer) verification of its users.


This, the agency said, is in violation of anti-money laundering norms.

“WazirX does not collect requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines,” the agency said in a statement, according to Money Control.
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According to ED, WazirX was used by the accused Chinese nationals to launder ₹57 crore by depositing the amount into their WazirX wallet and then converting them to cryptocurrency Tether — a stablecoin that has been accused of manipulating the price of Bitcoin in the past.

The Tether holdings were then transferred to Binance wallet, which is the largest cryptocurrency exchange in the world as per volume.

Binance Holdings is registered in the Cayman Islands, notorious for money laundering, and is currently under investigation by the US Justice Department and Internal Revenue Service.
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SEE ALSO:
China’s crypto crackdown grows, with 1100 people behind bars for money laundering

A large number of UK crypto firms are not meeting anti-money laundering standards, the national regulator has said
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