The Enforcement Directorate (ED) froze Rs 370 crore from the crypto exchange on Thursday in the highest digital asset currency seizure ever. The development comes at a time there are said to be ten crypto exchanges in the eyes of the ED for their alleged involvement in money laundering of hundreds of crores of Rupees. The crypto platforms allegedly were noticed after raids at Directors of Zanmai Lab Pvt Ltd, the parent company of popular crypto exchange, WazirX.
A day before the raids by the Enforcement Directorate, the Minister of State for Finance Pankaj Chaudhary had apprised the Rajya Sabha that the agency was investigating two cases regarding crypto-currency against WazirX.
Choudhary said, “In one of the cases, investigation done so far has revealed that one Indian Crypto-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.”
The statement of the Union Minister says that a Show Cause Notice (SCN) has been issued under the provisions of FEMA against WazirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.
Further, in another case, it is noticed that Indian exchanges, namely WazirX, have permitted the foreign users’ request to convert one crypto into another on its own platform and by using transfers from third-party exchanges, namely FTX, BINANCE, etc.
Its probe has surfaced instances of the accused firms approaching the exchanges to buy crypto coins for more than ₹100 crores and sending the coins to international wallets. The people told the source on the condition of anonymity. They said the exchanges did not conduct any enhanced due diligence and even failed to raise suspicious transaction reports.
WazirX said this week that it was compliant with the KYC law. It has a no-tolerance policy towards any illegal activities, a spokesperson said.
The accused app-based loan companies allegedly utilised fintech to receive payments and payouts, said a person aware of the matter. The profits accumulated, and the balance was then routed out of the country using crypto, adding a different layer to the funds, said the person.
“The trail of these proceeds of crime becomes difficult to detect, as the exchange might facilitate with the KYC but has no information on the crypto-to-crypto transfer made by the accused,” said the official.
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