Indian Regulator Seizes Assets Linked to WazirX

  • WazirX claims Binance is responsible for handling crypto trading pairs and processing payments.
  • Many Chinese crypto firms are moving to the Indian crypto market following a raid by the Chinese government.

Digital assets of WazirX, linked to Binance, have been frozen by India’s Directorate of Enforcement, or ED. The financial crime-fighting agency said the move was a part of its investigation of an alleged violation of foreign exchange policies. According to the financial regulator, WazirX’s frozen assets were worth 646.70 million rupees ($8.16 million).

WazirX is one of India’s biggest digital currency exchanges, and a spokesperson for the firm confirmed that the company had been cooperating with the ED over the last couple of days and had maintained a transparent communication system for their inquiries. WazirX is planning its next line of action as it does not agree with the actions of the ED.

The ED noted that it was investigating multiple shadow banks and their fintech companies for money laundering. According to the body, these organizations violated central bank regulations and engaged in fraudulent lending practices.

A part of the release read,

While doing fund trail investigation, ED found that large amounts of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad … maximum amount of funds were diverted to WazirX exchange and the crypto assets so purchases have been diverted to unknown foreign wallets.

The regulator stated that the probe was still ongoing. The ED added that WazirX and Binance‘s transactions were subject to weak regulatory oversight and low KYC standards. It also claimed that the crypto exchange failed to keep track of the necessary data to confirm the source of the funds used to commit the fraud allegations.

According to the ED,

WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.

Binance CEO Changpeng Zhao said in a series of tweets that the company had no equity in Zanmai Labs, the firm running WazirX and created by the original founder.  Zhao claimed that Binance simply provides wallet services for WazirX as a tech solution, adding that WazirX was in charge of managing KYC and other exchange-related activities.

Nischal Shetty, the director of WazirX, refuted many of Zhao’s claims, noting that the crypto exchange was purchased by Binance Zanmai Labs and according to him, “is an India entity owned by me & my co-founders.” Shetty further claimed that Binance was in charge of handling crypto trading pairs and processing withdrawals.

Many companies are reportedly turning to the market in India as a result of the migration of several crypto firms from China following a legislative crackdown. According to the ED, certain financial institutions supported by Chinese investors piggybacked on Indian businesses that had outdated licenses for non-banking financial organizations to provide loan services to locals.

Regulators are expected to tighten financial measures around crypto service providers following the recent cases of money laundering and unlawful loans.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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