WazirX Case Exposes Dark Side of Crypto Transactions: Government Sources

Enforcement Directorate (ED) had frozen the assets of wazirxWhich is linked to Binance, the world’s largest digital currency exchange, as part of an investigation into suspected violations of foreign exchange regulations.

The ED said it has attached assets worth Rs 646.70 million of WazirX, one of India’s largest virtual currency exchanges.

A WazirX spokesperson said, “We have been cooperating fully with the Enforcement Directorate for several days now and have answered all their questions in a thorough and transparent manner.”

“We do not agree with the allegations in the ED’s press release. We are evaluating our further course of action.”

The investigative agency said its action was related to an investigation into the crypto exchange’s suspected role in helping instant loan app companies convert proceeds of crime into cryptocurrencies on its platform.

The discovery was made on one of the directors of Zanmai Lab, the owner of WazirX.

ED on money laundering probe

The ED said it was conducting money-laundering probe against several shadow banks and their fintech companies for violating central bank norms and indulging in predatory lending practices.

“While investigating the fund trail, the ED found that large amounts of funds were diverted by fintech companies to purchase crypto assets and then launder them overseas… to unidentified foreign wallets,” it said in a release.

The probe agency said that many of these fintech companies engaged in illegal lending practices were backed by Chinese funds. (https://bit.ly/3zArOBV)

The ED had launched its probe into WazirX last year for suspected violations of foreign exchange regulations.

Over 55% drop in trading on WazirX

WazirX, which has around 15 million users and is India’s largest crypto exchange, has reported a sharp 50% drop in trading on its platform, while its WRX crypto token declined. 23 per coin earlier this month Wednesday 17.

In one week, WazirX’s trading volume is down more than 55% – from $4.3 million on August 5 to $2 million on August 9.

Binance CEO Tweets About WazirX

Meanwhile, Binance CEO Changpeng Zhao tweeted that the company does not hold shares in Zanmai Labs.

“Binance has no equity in Zanmai Labs, the entity that operates WazirX and was founded by the original founders,” he said.

Zhao wrote, “On November 21, 2019, Binance published a blog post that it had “acquired” WazirX. This transaction was never completed. Binance could never – at any time – operate WazirX. does not own any shares of Zanmai Labs, the operating entity.”

“Binance only provides wallet services for WazirX as a technical solution. There is also integration using off-chain tx to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up , KYC, trading and withdrawals,” Zhao said.

Last year, the ED was probing a money laundering case involving illegal online betting applications owned by Chinese. The ED had said that during the investigation it was found that the proceeds of crime worth around Rs 570 million were converted into cryptocurrencies using the Binance platform.

with agency input

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