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India’s Enforcement Directorate is investigating several crypto exchanges, in addition to WazirX, for aiding to launder money for the accused firms with China link.
The Indian government and law enforcement agencies have initiated tough measures in the country’s crypto space. India’s Enforcement Directorate (ED) is currently investigating crypto exchanges, including WazirX, for aiding in money laundering activities of more than $130 million or 10 billion INR.
In their investigation, the ED found that these accused crypto firms have been involved in the instant loan app case along with having a China link. The accused firms approached Indian crypto exchanges for buying coins of over 100 crores and then sending them to international wallets.
The ED also accused the exchanges of failing to conduct any due diligence. It also noted that the exchanges failed to raise “Suspicious Transaction Reports” (STRs). As part of the investigation, the ED will also question officials of the crypto exchanges next week. Speaking to Economic Times, one of the people familiar with the matter said:
“While so far the agency has frozen the accounts of WazirX, similar transactions have taken place on the other exchanges and they have been asked to join the probe”.
In many cases, the KYC details collected by the exchanges turned out to be dubious. “They were traced to some persons living in remote areas or a tier-2 or tier-3 town, having no connection with the transactions,” the source said. The source added:
“Once these firms learned that they were under the scanner, they shut shop and used the crypto route to siphon the funds abroad. The opaque nature of the crypto ecosystem and the industry not being regulated provided the requisite cover for these firms to park their assets offshore. This makes investigating the proceeds of crime and trailing the ultimate beneficiary and the nature of the assets created by them difficult”.
The WazirX Crypto Exchange Episode
India’s largest crypto exchange WazirX has recently come under the radar of the Enforcement Directorate on allegations of money laundering. Interestingly, there has been a fresh issue relating to the ownership of WazirX.
1/ Deal involved Binance Parent entity
After some media reports on Binance structure, we asked about it
We were given an ambiguous answer that parent entity is under restructuring
It’s been many months, still waiting for Binance Parent entity
Can Binance name Parent entity? https://t.co/5oehKqaTxp
— Nischal (Shardeum) ⚡️ (@NischalShetty) August 6, 2022
With the latest confusion of ownership, the ED has approached both exchanges. “Both have been approached to answer a basic question as to who is responsible for maintaining the details of the 15 million accounts on the exchange. The two have passed the blame on to the other on questions relating to accountability and non-compliance,” the source said.
The ED has already frozen the bank accounts of WazirX having funds worth 650 million INR. WazirX claims no wrongdoing and said that it has zero tolerance policies toward illegal activities.