“ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Banks assets worth Rs 64.67 Crore (approximately $8.1 million) for assisting accused instant loan app companies in the laundering of fraud money via purchase &transfer of virtual crypto assets”. – ED.
WazirX is India’s biggest cryptocurrency exchange; reportedly owned by Binance, the exchange serves millions of crypto users in India, making it easier for them to buy crypto with their fiat currency. Though being the biggest exchange in India, this fintech company has made it a hubby in violating the financial laws of the country.
A dive into the ED investigation
The Enforcement Directorate stated that it was investigating the company in relation to a fraudulent scam masterminded by an illegal instant loan app. According to the ED reports, the scammers were able to easily convert their proceeds to crypto on WazirX because the exchange failed in keeping proper documentation of its users or platform’s activities.
This is not the first time that WazirX is in ED’s black book; in 2021 the crypto platform was under investigation by the ED for helping Chinese-owned illegal betting platform exchange their fiat (worth over $7 million) for cryptocurrencies.
ED blames WazirX for being negligent
According to the Enforcement Directorate; the crypto platform failed to collect the necessary documents from its users as required by foreign exchange regulations. As such, it was sanctioned for violating the FEMA 1999 provisions.
Since it wasn’t well structured (regulatory-wise), it became the first go-to for scammers to convert their returns to crypto and then move them to foreign wallets, thus making it difficult to track financial records.
The ED also revealed that during its investigation, it was discovered that huge amounts of funds were moved into the platform to purchase cryptocurrency.
CZ says Binance never purchased WazirX
On the 20th of November, 2019; the binance blog announced that the wworld’sbiggest crypto exchange platform – Binance would be acquiring WazirX.
While everyone thought this to be true, the CEO of Binance – Changpeng Zhao tweeted that Binance never purchased WazirX and the contract to purchase the platform was never completed and Binance only provides wallet services to the exchange.
WazirX tries to regain its user’s trust
Regardless of the many allegations thrown at the exchange, the fintech company told the public via a tweet that it has been fully cooperating with the Enforcement Directorate for several days and the accusations thrown at them were false.
The team also reassured its users that the platform would still be operating as usual and users can deposit and withdraw cryptocurrencies as before.
Though the platform still allows users to deposit and withdraw easily, most users are withdrawing and keeping their assets in a safer storage, this was also encouraged by a tweet from CZ
“If you have funds in WazirX, you should transfer it to Binance. Simple as that …”
