ED Issues FEMA Notice to India’s Largest Cryptocurrency Exchange WazirX

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ED Issues FEMA Notice to India's Largest Cryptocurrency Exchange WazirX


NEW DELHI: The Execution Directorate on Friday it said it has issued a demonstration cause notice to the country’s largest cryptocurrency exchange for transacting over Rs 2,790 crore in alleged violation of the Foreign Exchange Management Act (FEMA).
WazirX, registered under the company called Zanmai Labs Pvt Ltd, was incorporated in December 2017 as a national cryptocurrency star-tup and its directors Nischal Shetty and Hanuman Mhatre, along with the company, have been named in the notice issued by the investigation. central. agency after the completion of the investigation.
The agency issued a statement saying it came across the company’s transactions during an ongoing money laundering investigation into “Chinese-owned” illegal online gambling apps.
The show’s cause notice is for transactions worth Rs 2,790.74 crore, the ED said.
“The accused Chinese nationals were found to have laundered the proceeds of crime worth approximately 57 million rupees by converting deposits of Indian rupees (INR) into cryptocurrency ties (USDT) and then transferring them to Binance (exchange registered in the Cayman Islands) Wallets according to instructions received from abroad, “he said.
Binance is considered a market leader in this domain and had acquired WazirX in 2019.
“WazirX enables a wide range of cryptocurrency (CC) transactions, including their exchange with INR and vice versa, CC exchange, person-to-person (P2P) transactions, and even the transfer / receipt of cryptocurrencies held in their group accounts to wallets from other exchanges, which could be held by foreigners in foreign locations, “the ED alleged.
WazirX, it alleged, does not collect the necessary documents in clear violation of the mandatory basic rules against money laundering (AML) and the fight against terrorist financing (CFT) standards and also FEMA guidelines.
“In the period under investigation, WazirX users through their common account, have received incoming cryptocurrencies worth Rs 880 crore from Binance accounts and have transferred cryptocurrencies worth Rs 1,400 crore to Binance accounts.
“None of these transactions are available on the blockchain for any audit or investigation,” stated the ED.
WazirX clients were found to be able to transfer ‘valuable’ cryptocurrencies to anyone regardless of location and nationality “without” any proper documentation, making it a safe haven for users seeking money laundering and other illegitimate activities, the agency alleged.
The notice of demonstration cause was issued to the company, following the investigation of these alleged violations and how it is claimed to be a violation of FEMA, official sources said.
The Indian government has said that it was open to evaluating and exploring new technologies such as cryptocurrencies to improve governance.
A bill in this regard could be presented at the Parliament and recommendations made by a high-level internal ministerial committee on digital currencies could be included, the government said.

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