ED issues shows cause notice74 crore. to crypto currency exchange, WazirX
Mumbai, Jun 11 The Enforcement Directorate (ED) issued a show-cause notice to cryptocurrency exchange WazirX and its directors Nischal Shetty and Sameer Mhatre on June 11 for contravention of FEMA, 1999 for transactions involving crypto currencies worth Rs 2790. This was informed by ED in its Twitter handle.
The notices were issued under the Foreign Exchange Management Act (FEMA), 1999, after the ED initiated an investigation on the basis of an ongoing money laundering probe into "illegal" Chinese-owned online betting applications, the agency said in a statement.
WazirX is an Indian cryptocurrency exchange that acts as a platform for trading in digital currencies such as Bitcoin, Ethereum, Tron, Ripple and Litecoin.
The ED claimed Chinese nationals had laundered the proceeds of crimes worth about Rs 57 crore by converting Indian rupee deposits into the cryptocurrency Tether and then transferred them to Binance Wallet, an exchange registered in the Cayman Islands, based on "instructions received from abroad."
The agency said users of WazirX, via its pool account, received cryptocurrency worth Rs 880 crore from Binance accounts and transferred out digital currencies worth Rs 1,400 crore to Binance accounts.
"None of these transactions are available on the blockchain for any audit/investigation," the ED said.
The platform was launched in 2018.
"WazirX does not collect requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines," the agency said in a statement. "It was found that the WazirX clients could transfer 'valuable' cryptocurrencies to any person irrespective of location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering/other illegitimate activities."