India’s Enforcement Directorate (ED) Probes Crypto Exchanges for Allegedly Laundering Charges
- The ED will subject the officials of these exchanges to investigation again next week.
- The ED is closely monitoring social media conversations between Binance CEO (CZ) and WazirX CEO (Nischal Shetty).
The enforcement directorate will investigate more than ten crypto exchanges over their roles in helping criminal firms launder over RS 1,000 crore. These firms were among those the ED is investigating over the instant loan app fraud case. According to inside sources, these companies have a China link.
Those who spoke to the media anonymously said the investigation revealed many instances where these accused firms bought over RS 100 crore worth of cryptos from exchanges. Sometimes, they also fund cross-broader wallets through these exchanges. According to the sources, the exchanges didn’t perform any due diligence or report possible cases of fraud concerning these transactions to the appropriate authorities.
An industry executive told the media that the ED would probe the officials of the affected exchanges again next week. An official with inside knowledge about the matter said the agency had suspended transactions on WazirX’s bank accounts. However, it observed that similar transactions took place on other exchanges. Hence, the financial watchdog has added these exchanges to the list of those to be investigated.
The agency also discovered that these exchanges obtained questionable KYC (know your customer) details. ED explained that these KYC details belonged to those living in remote areas or towns with zero connection to the transactions. Even though the exchanges claimed to have met regulatory compliance by collecting KYC details, they didn’t raise any suspicious transaction reports (STRs).
When these companies discovered their secret was open, they started using crypto to send funds overseas. The lack of clarity and regulation over the operations in the crypto sector made it possible for these firms to send their funds abroad easily. Thus, it becomes difficult for investigators of the transactions to track the final beneficiary of the funds or the digital assets they used for these transactions.
ED Resorts to Using Social Media
The ED is closely monitoring social media conversations between Binance CEO (CZ) and WazirX CEO (Nischal Shetty). The agency will focus on ownership transfer and structure between these persons. Also, it intends to discover whether the exchange was non-compliant with the proper rules. Recent ED investigations show that the ownership structure of the exchange isn’t clear enough.
ED has requested that CZ and Shetty explain who is responsible for maintaining transactions on the exchange’s 15 million accounts. Recent social media posts by the two CEOs show they have been passing the responsibility to each to avoid taking the blame for what happened. In a press release earlier in the week, ED claims that Binance and WazirX have an intentional agreement not to reveal the genuine ownership structure of the Indian-based exchange.
The agency explained that WazirX uses the @awsmumbai (a cloud-based software) while all its employees work remotely. However, Binance controls all crypto-crypto transactions on WazirX. ED also said WazirX had assisted about 16 fintech firms that the agency is investigating for money laundering allegations to send their illegal earnings abroad using cryptocurrencies.
While WazirX has debunked the claims, a Binance spokesperson said Zanmai is fully responsible for activities going on WazirX and the users’ funds. The spokesperson added that Binance isn’t involved in WazirX’s operations.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
