ED probing crypto exchange WazirX for money laundering of Rs 2,790 crore

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New Del­hi: Min­is­ter of State for Finance Pankaj Chaud­hary on Tues­day said the Direc­torate of Enforce­ment is prob­ing alleged mon­ey laun­der­ing of Rs 2,790 crore through cryp­to exchange WazirX.
The ED is inves­ti­gat­ing two cas­es relat­ed to Cryp­to-cur­ren­cy against WazirX under the pro­vi­sions of For­eign Exchange Man­age­ment Act, 1999 (FEMA), he said in a writ­ten reply to the Rajya Sabha.

“In one of the cas­es, inves­ti­ga­tion done so far has revealed that one Indi­an Cryp­to-exchange plat­form, Wazirx, oper­at­ed by Zan­mai Labs Pri­vate Lim­it­ed in India was using the walled infra­struc­ture of Cay­man Island based exchange BINANCE. Fur­ther it has been found that all cryp­to trans­ac­tions between these 2 exchanges were not even being record­ed on the blockchains and were thus cloaked in mys­tery,” he said.

Accord­ing­ly, she said, a Show Cause Notice (SCN) has been issued under the pro­vi­sions of FEMA against WaxirX for allow­ing out­ward remit­tance of cryp­to assets worth Rs 2,790 crore to unknown wallets.

Fur­ther, in anoth­er case, it is noticed that Indi­an Exchanges name­ly WazirX has allowed the for­eign users’ request to con­vert one cryp­to into anoth­er on its own plat­form as well as by using trans­fer from third-par­ty exchanges name­ly FTX, BINANCE, etc, he said.

In reply to anoth­er ques­tion, Chaud­hary said cryp­tocur­ren­cies and Non-Fun­gi­ble Tokens (NFTs) are by def­i­n­i­tion bor­der­less and require inter­na­tion­al col­lab­o­ra­tion to pre­vent reg­u­la­to­ry arbitrage.

There­fore, any leg­is­la­tion for reg­u­la­tion or for ban­ning pos­ses­sion of and trade in such a bor­der­less sec­tor can be effec­tive only after sig­nif­i­cant inter­na­tion­al col­lab­o­ra­tion on eval­u­a­tion of the risks and ben­e­fits and evo­lu­tion of com­mon tax­on­o­my and stan­dards, he said. 

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