Indian authorities freeze $8.1 million in WazirX funds as part of anti-money laundering probe

As part of an investigation into instant personal loan fraud, India’s Enforcement Directorate (ED) announced the freezing of approximately $8.1 million in funds and conducted a search related to cryptocurrency exchange WazirX.

In Friday’s announcement, the Bureau of Enforcement allegedly WazirX facilitated unnamed fintech firms “buying crypto assets and then laundering money abroad” as part of a Chinese-backed company’s scheme to circumvent India’s licensing rules. In its investigation, ED said it had ordered the freezing of WazirX bank accounts containing 646.7 million Indian rupees (about $8.1 million at the time of publication) and conducted a search related to co-founder Sameer Mhatre.

The investigation is still ongoing, according to the regulator. However, the ED alleges that the cryptocurrency exchange has “lax KYC practices” and “lacerated regulatory controls” over transactions between WazirX and Binance, and that there are no records needed to verify the origin of funds used to buy cryptocurrency in the alleged fraud information.

“Despite repeated opportunities, WazirX failed to provide crypto transactions from suspicious fintech APP companies and disclose KYC of wallets,” the ED said, adding:

“WazirX was unable to provide any account of lost crypto assets. It made no effort to trace those crypto assets. By encouraging obscurity and lax anti-money laundering norms, it actively assisted approximately 16 alleged fintech companies to launder the proceeds of crime using cryptocurrencies. “

In a Friday Twitter post, Binance CEO Changpeng Zhao Say The company “does not own any equity in Zanmai Labs, the entity that operates WazirX and was established by the original founders.” He added that “Binance only provides wallet services for WazirX as a technical solution,” while WazirX is responsible for KYC and Other operations of the exchange.

related: Indian watchdog probes cryptocurrency exchanges suspected of violating foreign exchange laws

With the exodus of many cryptocurrency companies China after the regulatory crackdown, according to reports, many companies have turned to the Indian market. The ED reported that some fintech companies “backed by Chinese funds” “piggybacked” Indian companies with lapsed non-banking financial company licenses to provide loans to residents.

Education Department took similar action In June 2021, against WazirX, the cryptocurrency exchange was ordered to show reasons related to money laundering investigation transactions involving illegal online betting applications from Chinese nationals. WazirX Director Nischal Shetty Say “Beyond [its] Comply with legal obligations to know your customer (KYC) and anti-money laundering (AML) processes and always provide information to law enforcement agencies when required. “

Cointelegraph reached out to WazirX but did not hear back at the time of publication.