India’s Enforcement Directorate (ED) has ordered the freeze of a WazirX bank account with Rs 64.67 crore (roughly $8.1 million) in connection with a money laundering investigation, IndiaToday reported Aug. 5.
India is investigating money laundering
The initial investigation was into non-banking financial companies (NBCFs) over predatory lending practices that violated the Reserve Bank of India guidelines.
However, the agency soon discovered that several Fintech companies in the country that were unable to get licenses used the licenses of defunct NBCFs to operate.
The investigations led most of these fintech companies to shut operations and spend their profits on buying crypto assets.
The WazirX connection
According to the regulator, WazirX received most of these funds, which have now been moved into foreign wallets.
The financial regulator claimed WazirX provided contradictory and ambiguous information throughout the investigation.
Zanmai Labs Pvt Ltd – the company owning WazirX Crypto Exchange – has created a web of agreements with — Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore — to obscure the ownership of the crypto exchange.
Initially, WazirX said it controlled all Indian rupees to crypto transactions and crypto to crypto transactions on the exchange. But the company later changed its tune to say it was only responsible for the Indian rupees to crypto transactions, while Binance controlled everything else in its attempt to evade regulatory oversight.
ED continued that WazirX directors failed to cooperate during investigations after several offers by the agency.
It claimed that this lack of cooperation led to the search and the discovery that the exchange had “lax KYC norms, loose regulatory control of transactions between WazirX & Binance, non-recording of transactions on the blockchain to save costs and non-recording of the KYC of the opposite wallets.”
The regulator added that the exchange had made no efforts to retrieve the crypto assets involved in the investigation. Because of these reasons, its “movable to the extent of Rs 64.67 crore” were frozen.
As of press time, WazirX was yet to respond to CryptoSlate’s requests for comment on the matter.