Investment

The Indian stock exchange WazirX, owned by Binance, was investigating the alleged failure of AML

The well-known Indian cryptobursa WazirX, which Binance acquired in 2019, is being investigated for alleged violations of the Indian Foreign Exchange Act (FEMA). The probe was publicly announced today in an official tweet from the Indian Directorate of Enforcement (ED):

In the Indian numbering system, one rupee indicates 10 million. Thus, the 2,790 rupees investigated in cryptocurrency transactions is about $ 389 million. According to a message from the Times of India, ED named the four-year stock exchange and its directors, Nischal Shetty and Hanuman Mhatre, in an announcement of the cause of the show.

Law enforcement agents allegedly came across suspicious transactions during a money laundering investigation into illegal online betting applications involving Chinese citizens. The Times cites ED’s explanation that the alleged individuals laundered the proceeds of crime worth about 57 million rupees ($ 7.8 million) by transferring their rupees to Tether (USDT). They then allegedly transferred USDT to Binance’s wallets according to instructions from abroad. ED further claims that:

“During the period under investigation, WazirX users received an incoming cryptocurrency of Rs 880 rupees (USD 120.4 million) through their fund account.) from Binance’s accounts and transferred a cryptocurrency worth Rs 1,400 million rupees ($ 191.6 million) to Binance’s accounts. None of these transactions are available in the blockchain for any audit or investigation. “

ED claims that WazirX was unable to gather the required information to verify its clients and transactions, which is contrary to anti-money laundering and anti-terrorist financing laws, as well as to FEMA. Law enforcement agents say that Exchange clients are therefore able to transfer cryptocurrency to any other person, regardless of jurisdiction or nationality, without having to submit the required documents.

WazirX Director Nischal Shetty has already responded to the ED announcement with an extended thread on Twitter:

Related: Despite regulatory uncertainty, giant cryptocurrency giants overcame the invasion of India

In two subsequent tweets, Shetty wrote that WazirX goes “beyond our legal obligations by monitoring the Know Your Customer (KYC) and Anti Money Laundering (AML) processes and providing information to law enforcement authorities whenever required. “He added that the stock exchange is therefore able to track all users of the platform using official identity data.

Shetty concluded that if the exchange received a formal communication directly from the ED, it would cooperate fully with the probe. Reports of the investigation come at a time of unpredictable development of cryptocurrencies in the country, with recent reports suggesting that authorities may now have abandons earlier plans for a blanket ban on bitcoins (BTC) in favor of classifying cryptocurrencies as distinct asset classes.


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