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Top Cryptocurrency News: Enforcement Directorate freezes over Rs. 64-crore bank deposits of crypto exchange WazirX

05-Aug-2022 By: Rohit Tripathi
Top Cryptocurrency N

The Enforcement Directorate has initiated investigations 

Against one of the directors of Zanmai Lab Private Limited, which controls the prominent cryptocurrency exchange WazirX.

The financial probe agency has issued an order freezing their bank accounts worth Rs. 64.67 crores.

The ED is investigating a number of Indian NBFC businesses and its fintech partners for predatory lending practices in violation of RBI norms, as well as deploying telemarketers who abuse personal data and use abusive language to extract excessive interest rates from loan takers.

Several fintech businesses backed by Chinese capital were unable to obtain an NBFC license from the RBI to conduct lending activities. As a result, they devised the MoU method with defunct NBFCs in order to piggyback on their license.

After the criminal investigation began, several of these fintech applications shut down and redirected the large earnings made utilizing the aforementioned method. ED discovered that huge amounts of funds were diverted by fintech businesses to acquire crypto assets and subsequently launder them abroad when conducting fund trail investigations. These businesses and virtual assets are currently untraceable.

“The financial probe agency issued summons to the cryptocurrency exchanges. It is seen that a large amount of funds were transferred to the WazirX exchange, and the crypto-assets acquired were moved to unknown international wallets,” ED said

 According to the ED, Zanmai Labs Pvt Ltd, the business that owns WazirX Crypto Exchange, has formed a web of agreements with Crowdfire Inc. USA, Binance (Cayman Islands), and Zettai Pte Ltd Singapore in order to conceal ownership of the crypto exchange. Previously, Mr. Nischal Shetty, their Managing Director, stated that WazirX is an Indian exchange that controls all crypto-crypto and INR-crypto transactions and only has an IP and preferential arrangement with Binance.

However, Zanmai now claims that they are solely involved in INR-crypto transactions, and that all other transactions are handled by Binance on WazirX. The central agency witnessed them offering inconsistent and unclear replies in order to avoid scrutiny by Indian regulatory bodies during the probe.

WazirX operates on cloud-based software (@AWS Mumbai), all employees work from home, the registered office is a two-chair co-working Wework space, and all crypto-crypto transactions are governed by Binance (which, once again, has no known office, no known employee, and rarely responds to legal@binance.com queries).

Despite several opportunities, WazirX did not provide the crypto transactions of the dubious fintech APP firms or divulge the KYC of the wallets. The majority of transactions are also not recorded on the blockchain.

Prior to July 2020, WazirX stated that they did not even record the information of the Bank Account from which funds were streaming into the exchange to acquire crypto assets.

Because the Director of WazirX exchange refused to cooperate, the ED initiated a search operation under PMLA (Prevention of Money Laundering Act, 2002) on August 3.

ED said: “It was discovered that Sameer Mhatre, the director of WazirX, has complete remote access to the WazirX database, but he is not giving information about transactions linked to crypto assets acquired with the proceeds of the Instant Loan APP scam. WazirX is unable to account for the stolen crypto assets due to inadequate KYC standards, tax regulatory oversight of transactions between WazirX and Binance, non-recording of transactions on Blockchains to reduce expenses, and non-recording of the KYC of the opposing wallets. It has made no attempt to track down these digital assets.”

According to the government agency, “by fostering obscurity and having inadequate AML rules, it has actively supported roughly 16 accused fintech businesses in laundering the proceeds of crime through the crypto channel. As a result, comparable moveable assets worth Rs. 64.67 crores held by WazirX were frozen under the Prevention of Money Laundering Act, 2002.”


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