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New Delhi: The Enforcement Directorate (ED) on Friday, August 5 said it has frozen bank deposits of Rs 64.67 crore as part of a money laundering probe against crypto currency exchange WazirX.
The central probe agency said it conducted raids against one of the directors of Zanmai Labs Private Limited, which owns WazirX, on August 3 in Hyderabad and alleged he was “non-cooperative”.
ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets.
— ED (@dir_ed) August 5, 2022
The agency had charged WazirX last year for alleged contravention of the Foreign Exchange Management Act (FEMA).
“It was found that Sameer Mhatre, director, WazirX, has complete remote access to the database of WazirX, but despite that 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,” the ED statement alleged.
According to the Economic Times, the probe agency is conducting a money laundering investigation against several NBFCs and their fintech partners over “predatory lending practices in violation of the Reserve Bank of India guidelines”. During the investigation, the ED found a large amount of funds which were diverted by fintech firms to buy crypto assets and allegedly laundered abroad. The maximum amount of funds, as per the report, was diverted to WazirX exchange.
On August 2, minister of state for finance Pankaj Chaudhary told the Rajya Sabha that the ED is probing alleged money laundering of Rs 2,790 crore through crypto exchange WazirX.
He said that there are two cases related to cryptocurrency against WazirX under the provisions of FEMA.
“In one of the cases, investigation done so far 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. 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,” Chaudhary said in a written response to the Rajya Sabha.
In another case, it is noticed that the Indian exchanges, namely WazirX, has allowed 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., he said.
The ED in its statement said that WazirX made no efforts to trace these crypto assets.
“By encouraging obscurity and having lax anti-money laundering norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route,” it said.
Therefore, the ED said, equivalent movable assets to the extent of Rs 64.67 crore lying with WazirX were frozen under the Prevention of Money Laundering Act.
(With PTI inputs)