Cryptocurrency exchanged WazirX announced on September 12, 2022 that the Enforcement Directorate (ED) has granted it permission to use its bank accounts. It said this development came about after it cooperated with investigators and provided them with all the required details, information, and documents of the suspected companies that had used the WazirX platform.
WazirX has claimed that most of the users flagged by the ED had already been identified as suspicious by WazirX’s internal team, and these accounts were already blocked in 2020-2021.
Last month, the ED had frozen WazirX’s bank accounts containing Rs 64 crore of the company’s money. It had also raided its premises for alleged violation of the FEMA Act. The ED officials had also searched the premises of one of the directors of Zanmai Labs, which owns WazirX.
WazirX has now stated that it is conducting know your customer (KYC) and/or anti-money laundering (AML) checks despite having no legal duty to do so, and that it is not affiliated with any of the suspected accused fintech and instant lending apps, which appear to be the focus of ED inquiry.
It said that “WazirX is like any other intermediary whose platform may have been exploited”.
“The company has no association with any of the alleged accused fintech and instant loan app entities which appear to be the subject of ED investigation, and is carrying out the KYC/AML checks despite having no legal obligation to do so. WazirX is like any other intermediary whose platform may have been misused,” it said.
In the wake of the ED investigations, global crypto exchange Binance also came out with a clarification announcing that it did not own any equity in Zanmai Labs, which operates WazirX.
This came after Minister of State for Finance Pankaj Chaudhary told Rajya Sabha in a written reply that ED has served a notice to WazirX under FEMA. Chaudhary had said in a written reply: “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 two exchanges were not even being recorded on the Blockchains, and were thus cloaked in mystery.”
ED is investigating fake instant loan apps accused of using illegal means to extract repayment amounts. These applications are allegedly backed by a few Chinese citizens, who had set up the whole operation in India and have fled to Hong Kong since.
The bad actors used crypto exchanges to transfer illegal funds outside India and exploited crypto exchanges’ ability to transfer money abroad without any scrutiny from the Reserve bank of India (RBI).
WazirX said that due to the active cooperation extended by it and active AML checks that led to the blocking of suspicious accounts, ED has unfrozen the bank accounts of WazirX.
WazirX is now in a position to continue its banking operations as usual, it added.
