As part of an investigation into immediate personal loan fraud, India’s Directorate of Enforcement (ED) has revealed that it has frozen around $8.1 million and conducted a search related to the cryptocurrency exchange WazirX.
In a statement released on Friday, the Directorate of Enforcement stated that WazirX enabled transactions by unidentified fintech businesses “to acquire crypto assets and subsequently launder them overseas” as part of a plan involving Chinese-backed corporations evading India’s licensing laws.
In its investigation, the ED said that it had ordered the freezing of WazirX bank accounts totaling 646.7 million Indian rupees (about $8.1 million at the time of publishing) and performed a search related to co-founder Sameer Mhatre.
According to the regulatory agency, the inquiry continued. However, the ED asserted that the cryptocurrency exchange had “lax KYC rules” and “weak regulatory supervision” over transactions between WazirX and Binance, and did not record the information required to authenticate the origin of the money used to acquire cryptocurrency in the alleged scam.
“Despite multiple chances, WazirX did not disclose the crypto transactions of the suspicious fintech APP firms or the KYC of the wallets,” the ED noted, adding:
“WazirX cannot account for the lost cryptocurrency assets. It has not made any attempts to track down these digital assets. By fostering anonymity and having inadequate AML regulations, it has actively supported around 16 fintech businesses in laundering criminal money through the crypto method.”
Binance CEO Changpeng Zhao said on Twitter on Friday that the company “does not hold any ownership in Zanmai Labs, the organization that operates WazirX and was founded by the original founders.”
Binance exclusively offers wallet services to WazirX as a technical solution, while WazirX is responsible for KYC and other exchange activities.
WazirX director Nischal Shetty refuted several of CZ’s accusations on Twitter, stating that the cryptocurrency exchange “was bought by Binance Zanmai Labs” and “is an India business controlled by myself and my co-founders.” Binance is responsible for managing cryptocurrency trading pairs and processing withdrawals, according to him.
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